A New York buyer signs a purchase contract with a financing contingency requiring a 'conventional loan at prevailing market rates.' Market rates increase by 1.5% between contract signing and the loan application deadline. The buyer obtains a loan commitment at the higher current market rate but claims the contingency is not satisfied because rates increased. Which statement is correct?
Correct Answer
D) The contingency is satisfied because the loan meets current prevailing market rates
When a financing contingency references 'prevailing market rates' without specifying a rate or date, it refers to the rates available at the time the loan commitment is sought, not the rates at contract signing. The buyer obtained financing at current market rates, satisfying the contingency.
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Previous Question
A purchase contract in New York includes a clause stating 'Seller warrants that all systems and appliances will be in working order at closing.' Two days before closing, the furnace breaks down and requires $2,500 in repairs. The seller refuses to fix it, claiming normal wear and tear. How should this situation be resolved?
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A buyer in New York wants to include a clause allowing them to cancel the contract if they cannot sell their current home within 45 days. This type of provision is commonly known as a: