A buyer in Philadelphia enters into a PA Agreement of Sale with a mortgage contingency. The buyer applies for a loan and receives a commitment letter. However, between commitment and closing, the buyer takes on significant new debt by purchasing a car, causing the lender to rescind the commitment. Can the buyer invoke the mortgage contingency?
Correct Answer
D) No, because the buyer's own actions caused the commitment to be rescinded, violating the good faith obligation
The mortgage contingency requires the buyer to act in good faith to obtain and maintain financing. Taking on significant new debt after receiving a commitment, causing the lender to rescind, demonstrates a failure to act in good faith. The buyer cannot invoke the contingency to avoid the consequences of their own actions.
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More Pa Specific Contract Provisions Questions
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