A purchase contract in New York includes a mortgage contingency clause stating the buyer must obtain a commitment for an 80% LTV conventional loan at 7.5% interest within 30 days. The buyer obtains a commitment for an 80% LTV loan at 8.0% interest. The seller demands the buyer proceed with closing. Which statement is correct?
Correct Answer
C) The buyer can withdraw because the interest rate exceeds the contract specification
When a mortgage contingency specifies particular loan terms including interest rate, the buyer is not obligated to accept financing that does not meet all specified criteria. The 0.5% higher interest rate represents a material change from the contracted terms, allowing the buyer to withdraw.
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In a New York residential real estate transaction, buyer Jennifer wants to include a provision allowing her to withdraw from the contract if her attorney disapproves of any terms within 5 business days. This type of contingency is known as:
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