A Wisconsin purchase agreement includes a financing contingency stating that the offer is contingent upon the buyer obtaining a mortgage commitment within 21 days. On day 25, the buyer has not obtained financing and notifies the seller. What is the most likely outcome under Wisconsin law?
Correct Answer
D) The buyer may void the contract and recover the earnest money if the contingency was not waived.
Under Wisconsin contract law, a financing contingency protects the buyer's right to void the contract and recover earnest money if financing cannot be obtained within the specified timeframe. If the contingency was not waived and the buyer properly invokes it — even slightly after the deadline, depending on circumstances — the buyer is generally entitled to rescind and recover earnest money. Wisconsin's WB-11 form contingency provisions are designed to protect buyers who cannot obtain financing.
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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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