Which of the following best describes novation in a real estate contract?
Correct Answer
B) Substitutes a new party for an original party, fully releasing the original party from all obligations
Novation is the substitution of a new party for an original party in a contract, with the consent of all parties involved. Unlike an assignment — where the original party may remain secondarily liable — novation completely releases the original party from all contractual obligations. The new party assumes full responsibility under the contract.
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