A Vermont purchase and sale agreement contains a clause stating that if the seller fails to pay the Vermont Land Gains Tax at closing, the buyer will be held responsible for the unpaid tax. The buyer's attorney says this reflects Vermont law. Which statement best describes the legal basis for this provision?
Correct Answer
B) This clause reflects Vermont statute, which provides that the buyer may be held liable for unpaid Land Gains Tax if the seller defaults on the obligation
Under 32 V.S.A. Chapter 236, Vermont's Land Gains Tax statute includes a buyer liability provision: if the seller fails to pay the Land Gains Tax, the buyer can be held liable for the unpaid amount. This statutory backstop is why purchase agreements in Vermont routinely include provisions requiring the seller to pay the tax at closing and protecting the buyer through escrow or withholding mechanisms.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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