Under Tennessee law and standard real estate practice, which of the following is NOT a valid consequence of a buyer properly invoking an unsatisfied contingency within the specified deadline?
Correct Answer
C) The buyer may demand that the seller pay a penalty fee equal to the earnest money amount for failing to satisfy the contingency
When a buyer properly invokes an unsatisfied contingency, the buyer is entitled to terminate the contract and recover the earnest money, negotiate modified terms, or waive the contingency and proceed. However, the buyer cannot demand a penalty fee from the seller simply because a contingency was not satisfied. Contingencies are conditions that, if unmet, give the buyer an exit right—they do not impose financial penalties on the seller for circumstances that may be entirely outside the seller's control (such as a low appraisal or the buyer's inability to obtain financing).
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Related Topics & Key Terms
Key Terms:
Related Concepts
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
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