Kevin and Lisa are purchasing a home in Bellevue. Their purchase and sale agreement includes both a financing contingency and an inspection contingency. The inspection reveals significant foundation issues. Kevin and Lisa request a $15,000 price reduction. The seller counters with a $5,000 reduction. Kevin and Lisa reject the counter and invoke the inspection contingency to terminate the contract. The seller argues the buyers are in breach because they should have used the financing contingency instead. Which statement is most accurate under Washington law?
Correct Answer
A) The buyers properly invoked the inspection contingency, and the seller's argument is without merit
Under Washington contract law, each contingency is an independent contractual right. The inspection contingency specifically allows the buyer to terminate if not satisfied with the inspection results or the seller's response to repair/price requests. Kevin and Lisa properly exercised this right by: (1) completing the inspection within the contingency period, (2) requesting a price reduction, (3) receiving an unsatisfactory response, and (4) timely invoking the contingency to terminate. There is no rule requiring buyers to use one contingency over another, and the seller's argument has no legal basis.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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