Jennifer and Tom are purchasing a home in Provo, Utah. Their Utah REPC includes a Financing & Appraisal Deadline of May 10. On May 9, the lender informs them that the home appraised $15,000 below the purchase price and the loan is denied. Jennifer and Tom provide written notice to the seller before the May 10 deadline invoking the Financing & Appraisal condition. What is the correct outcome?
Correct Answer
A) Jennifer and Tom may cancel the contract and receive a return of their earnest money
Under the Utah REPC, the Financing & Appraisal condition allows the buyer to cancel the contract if they cannot obtain financing or if the property appraises below the purchase price, provided written notice is given before the Financing & Appraisal Deadline. Since Jennifer and Tom notified the seller on May 9 — before the May 10 deadline — they are entitled to cancel and receive their earnest money back. The appraisal shortfall is a valid basis for invoking this condition.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
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