In a Washington residential purchase and sale agreement, a financing contingency is primarily designed to protect which party?
Correct Answer
A) The buyer, by allowing the buyer to cancel the contract and recover the earnest money if financing cannot be obtained
A financing contingency in a Washington purchase and sale agreement is a buyer-protective clause. If the buyer is unable to obtain the specified financing on the stated terms within the contingency period, the buyer may terminate the contract and is entitled to a refund of earnest money. This is a standard protection recognized under Washington contract law and reinforced by the standard NWMLS forms used throughout the state.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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