A buyer executes a back-up contract using the TREC Addendum for Back-Up Contract. The first buyer's contract terminates on March 15. What happens to the back-up buyer's contract?
Correct Answer
C) The back-up contract automatically becomes the primary contract and the buyer receives notice of the effective date
Under the TREC Addendum for Back-Up Contract, when the first contract terminates, the back-up contract automatically moves to the primary position. The back-up buyer is notified and the effective date of the back-up contract is established.
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Related Topics & Key Terms
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Related Concepts
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
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