Maria is a buyer working with a Tennessee affiliate broker, Carlos. They have a signed purchase agreement with a seller for a home in Murfreesboro. The contract contains a home inspection contingency giving Maria 10 days to conduct inspections and either accept the property, request repairs, or void the contract. On day 11, Maria notifies Carlos she wants to void the contract because the inspector found a minor crack in the driveway. The seller refuses to release the earnest money. Which of the following best describes the likely outcome?
Correct Answer
B) Maria likely forfeited her right to void under the inspection contingency by failing to act within the 10-day period, putting her earnest money at risk
Contract contingencies in Tennessee purchase agreements are time-sensitive. The inspection contingency gave Maria 10 days to act — accept, request repairs, or void. By waiting until day 11, Maria allowed the contingency period to expire without exercising her rights. Under Tennessee contract law, failure to act within a contingency period generally results in the contingency being deemed waived, which means the contract becomes binding without the protection of that contingency. Maria's earnest money is now at risk if she refuses to close.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
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.
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