A buyer and seller in Kirkland execute a purchase and sale agreement with both a financing contingency (20 days) and an inspection contingency (10 days). On day 8, the buyer completes the inspection and is satisfied — no inspection response is submitted, which under the addendum language means the inspection contingency is approved. On day 22, the buyer's lender denies the loan. The buyer attempts to terminate under the inspection contingency, claiming the inspection revealed issues not initially noticed. The seller disputes this. Which of the following is the most accurate legal analysis?
Correct Answer
D) The buyer waived the inspection contingency on day 10 by not submitting a response, and the financing contingency expired on day 20, leaving the buyer with no valid contingency to invoke
This question involves two separate contingency timelines. The inspection contingency: under the addendum, failure to submit a response within 10 days constitutes approval — the buyer waived this contingency on day 10. The financing contingency: required written notice of inability to obtain financing by day 20. The loan denial came on day 22, after the financing contingency expired. With both contingencies waived or expired, the buyer has no contractual basis to terminate and recover earnest money. The seller is entitled to retain the earnest money as liquidated damages.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
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