Lisa is purchasing a home in Brentwood, Tennessee. Her contract contains an inspection contingency that expires in 10 days. On day 8, the inspector finds a defective HVAC system estimated to cost $6,000 to repair. Lisa's affiliate broker advises her that she has three options: terminate the contract, request the seller repair the HVAC, or request a price reduction. If the seller refuses all three options, what is Lisa's most appropriate course of action within the contingency period?
Correct Answer
B) Lisa should terminate the contract within the contingency period and recover her earnest money
If the seller refuses to repair the defect, reduce the price, or otherwise address the buyer's concerns, and the inspection contingency has not yet expired, Lisa's most appropriate course of action is to terminate the contract within the contingency period. Doing so allows her to recover her earnest money without penalty. Waiting past the contingency deadline would waive her right to terminate based on inspection findings.
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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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