James is purchasing a home in Fairfax County, Virginia. The purchase agreement includes a financing contingency stating that the contract is contingent upon James obtaining a loan at an interest rate no higher than 7.0%. James applies for a loan but is only offered a rate of 7.5%. Which of the following best describes James's rights under the Virginia purchase agreement?
Correct Answer
D) James may void the contract and recover his earnest money deposit per the contingency terms
A financing contingency in a Virginia purchase agreement protects the buyer by making the contract voidable if the specified financing terms cannot be met. Since James could not obtain a loan at or below 7.0%, the contingency was not satisfied, and James has the right to void the contract and recover his earnest money deposit, provided he follows the notice procedures specified in the contract.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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