Nina is purchasing a cooperative unit in Bergen County. The contract is contingent on approval by the cooperative board. The board meets monthly and has 60 days under the contract to approve or deny Nina's application. On day 45, the board sends a letter stating it has not yet reviewed Nina's application. On day 61, the board denies Nina's application. Nina argues the board's failure to act within 60 days automatically satisfies the contingency and she is entitled to proceed with the purchase. The seller, Greg, argues the board's denial on day 61 is controlling. Under New Jersey law and standard cooperative purchase practice, which statement is most accurate?
Correct Answer
C) The outcome depends on the specific contingency language; if the contract provides that the contingency expires if the board does not act within 60 days, Nina may have grounds to void the contract and recover her deposit, but deemed approval is unlikely without explicit contract language.
Cooperative board approval contingencies in New Jersey are governed by the specific language of the purchase contract. Unlike some other contingencies, a board's failure to act within the stated period does not automatically result in deemed approval unless the contract expressly provides for that outcome. More commonly, if the board does not act within the contingency period, the buyer may have the right to void the contract and recover the deposit — but not to compel the sale. The board's denial on day 61, after the 60-day period, may mean the contingency has expired and the denial is untimely, giving Nina the right to void and recover her deposit. However, 'deemed approval' forcing the sale is an extraordinary remedy not typically available without explicit contract language.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
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