A Texas buyer enters into a contract with both the Third Party Financing Addendum and the Addendum for Sale of Other Property by Buyer. The buyer's current home sells, but the buyer's new loan is denied. Under these addenda, the buyer:
Correct Answer
D) May terminate under the financing contingency even though the sale contingency was met
The financing contingency and the sale contingency are independent addenda. Even though the buyer's home has sold (satisfying one contingency), the buyer may still terminate under the financing contingency if the new loan is denied and the buyer made a good faith effort to obtain financing.
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Related Topics & Key Terms
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Related Concepts
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.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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.
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