Under Washington real estate law and practice, which of the following is NOT an accurate statement about the title contingency in a Washington residential purchase and sale agreement?
Correct Answer
C) A title contingency automatically clears all existing liens and encumbrances upon the buyer's approval of the preliminary report
A title contingency does NOT automatically clear liens or encumbrances. The buyer's approval of the preliminary title report means the buyer accepts the title in its current condition as disclosed — it does not extinguish existing encumbrances. Liens, easements, and other encumbrances that the buyer approves remain on title unless separately resolved. Clearing liens requires affirmative action (payoff, release, etc.) coordinated through escrow at or before closing.
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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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