Which statement best describes the purpose of a financing contingency in a Hawaii purchase contract?
Correct Answer
B) A financing contingency allows the buyer to terminate the contract and recover their earnest money if they are unable to obtain financing within the specified contingency period.
A financing contingency protects the buyer by allowing them to terminate the contract and recover their earnest money if they cannot obtain financing within the agreed-upon period. In Hawaii Association of Realtors (HAR) standard purchase contracts, the financing contingency period is typically around 21 days, though it is negotiable between the parties.
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Related Topics & Key Terms
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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.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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