A Washington buyer's purchase and sale agreement states that the financing contingency will be deemed waived unless the buyer delivers written notice of inability to obtain financing to the seller by 5:00 PM on the 20th day. The buyer's lender verbally informs the buyer of loan denial on day 18, but the buyer does not send written notice to the seller until day 21. What is the most likely outcome regarding the earnest money?
Correct Answer
D) The seller is entitled to retain the earnest money because the buyer failed to deliver written notice by the deadline
Under Washington contract law, contingency deadlines and notice requirements are strictly enforced. The contract required written notice by 5:00 PM on day 20. The buyer's verbal knowledge of the denial on day 18 does not satisfy the written notice requirement. Because the buyer failed to deliver written notice by the contractual deadline, the financing contingency is deemed waived, and the seller may be entitled to retain the earnest money as liquidated damages for the buyer's failure to perform.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
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