Patricia is selling her home in Laconia, New Hampshire. She signed a purchase and sales agreement with a buyer, but the buyer's lender requires a new appraisal showing the property value supports the loan amount. The appraisal comes in $18,000 below the agreed purchase price. The buyer's purchase agreement contains an appraisal contingency allowing termination if the appraised value is below the purchase price. The seller insists the contract is binding and the buyer must close. Which party's position is legally correct under NH contract law?
Correct Answer
A) The buyer is correct; the appraisal contingency allows termination if the appraised value is below the purchase price, and the buyer may exit and recover the deposit.
The purchase agreement contains an express appraisal contingency allowing the buyer to terminate if the appraised value is below the purchase price. Since the appraisal came in $18,000 below the agreed price, the contingency condition has been triggered. Under NH contract law, the buyer has the contractual right to exercise this contingency, terminate the agreement, and recover the earnest money deposit. The seller's argument that the appraisal is only a 'lender issue' ignores the express terms of the contract.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
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