Under the TREC Third Party Financing Addendum, if the buyer's loan is denied and the buyer has made a good faith effort to obtain financing, what happens to the earnest money?
Correct Answer
C) The earnest money is returned to the buyer
If the buyer's financing is denied and the buyer has made a good faith effort to obtain approval, the buyer may terminate the contract and the earnest money is returned to the buyer.
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Related Topics & Key Terms
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Related Concepts
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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.
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