Under the TREC contract, the seller has an existing mortgage with a prepayment penalty. At closing, the seller must pay off the mortgage. Who is responsible for the prepayment penalty?
Correct Answer
A) The seller is responsible for the prepayment penalty as part of paying off their own mortgage
The seller is responsible for the prepayment penalty on their own mortgage. The seller's obligation to deliver clear title includes paying off existing liens, including any prepayment penalties associated with the seller's loan.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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