A Wisconsin buyer submits a WB-11 Offer to Purchase that includes a contingency requiring the buyer to obtain mortgage financing within 15 days. The seller accepts the offer. On day 12, the buyer's lender denies the loan application. The buyer invokes the financing contingency and seeks to cancel the contract. Under Wisconsin law, what is the most likely outcome?
Correct Answer
B) The buyer is entitled to a full refund of the earnest money because the financing contingency was properly invoked
Under Wisconsin contract law, a properly drafted financing contingency in a WB-11 Offer to Purchase allows the buyer to cancel the contract and recover the earnest money if the buyer is unable to obtain the specified financing within the contingency period. Here, the buyer received a denial on day 12 — within the 15-day window — and properly invoked the contingency. The buyer is entitled to a full refund of the earnest money deposit because the condition precedent (obtaining financing) was not satisfied through no fault of the buyer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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.
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