Sarah is a licensed Oregon broker working under Principal Broker James. She writes a purchase and sale agreement for her buyer client on a Bend property. The offer includes a financing contingency stating that if the buyer cannot obtain a loan commitment at 7% or below within 15 business days, the buyer may terminate the contract and receive a full refund of the earnest money. The buyer cannot secure financing at 7% but finds a lender willing to offer 7.25%. Which of the following is most accurate under Oregon law?

Correct Answer

B) The buyer may terminate the contract and recover the earnest money because the contingency condition was not met

In Oregon, contingency clauses in purchase and sale agreements are strictly interpreted according to their written terms. The financing contingency explicitly states that the buyer may terminate and recover earnest money if a loan commitment at 7% or below is not obtained within 15 business days. Since 7.25% exceeds the specified rate, the contingency condition has not been met. The buyer has the contractual right to terminate and receive a full refund of the earnest money, regardless of how close the available rate is to the specified threshold.