Under the TREC Third Party Financing Addendum, the buyer specifies a maximum interest rate of 6.5% for a conventional loan. The lender offers the buyer a rate of 7.0%. Under the addendum, the buyer may:
Correct Answer
A) Terminate the contract because the rate exceeds the maximum specified in the addendum
If the lender cannot offer financing at or below the terms specified in the addendum (including the maximum interest rate), the buyer may terminate the contract under the financing contingency. The buyer is not obligated to accept less favorable terms.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
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