A Rhode Island purchase and sale agreement states that the seller will pay the buyer's closing costs up to $5,000 as a seller concession. At closing, the buyer's actual closing costs total $4,200. How should this seller concession be handled under standard Rhode Island closing practice?
Correct Answer
B) The seller concession is applied toward the buyer's actual closing costs of $4,200, and the unused $800 is forfeited
Under standard Rhode Island closing practice and consistent with general real estate contract principles, a seller concession toward closing costs is applied against the buyer's actual closing costs. If the actual costs are less than the maximum concession amount, the seller pays only the actual costs incurred ($4,200), and the unused portion ($800) is not paid out to the buyer as cash or credited elsewhere. Seller concessions are capped at the actual closing costs incurred and cannot be converted to cash for the buyer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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