Antonio signs a contract to purchase a house in Long Island. The contract contains a mortgage contingency clause requiring him to obtain financing within 45 days. On day 40, Antonio decides he no longer wants the house and deliberately fails to apply for a mortgage. The seller discovers Antonio never applied for financing. Under New York law, what is the result?
Correct Answer
A) Antonio breached his duty of good faith and cannot use the contingency to escape
New York law requires parties to act in good faith to satisfy contingencies. Antonio cannot deliberately prevent the contingency from being satisfied and then use that failure to escape the contract. His intentional failure to apply for financing constitutes bad faith and breach of contract.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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Previous Question
In New York real estate law, what is the legal term for the buyer's right to examine the property's title and raise objections before closing?
Next Question
Rachel contracts to sell her Staten Island home to Mark for $520,000. The contract includes a clause stating 'This agreement shall be binding upon the heirs, successors, and assigns of the parties.' Before closing, Rachel dies. Her estate wants to cancel the sale, claiming personal contracts don't survive death. Under New York law, what is the most likely outcome?