A Washington purchase and sale agreement contains a title contingency. The preliminary title report reveals a judgment lien against the seller for $45,000. The buyer objects to the lien within the contingency period. The seller agrees to pay off the lien at closing from sale proceeds. Which of the following is the most appropriate next step?
Correct Answer
A) The parties should amend the contract to acknowledge the lien and confirm the seller will satisfy it at closing
When a title defect such as a judgment lien is discovered and the seller agrees to resolve it at closing, the appropriate course of action is to amend the purchase and sale agreement to document the agreement. This creates a clear contractual obligation for the seller to satisfy the lien at closing and allows the transaction to proceed. The title company will then coordinate payoff of the lien through escrow at closing, and the buyer can be satisfied that the title will be clear upon recording.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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.
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