Marcus is purchasing a home in Charleston, West Virginia. The purchase agreement includes a financing contingency stating that the contract is void if Marcus cannot obtain a mortgage commitment at 6.5% or below within 21 days. On day 19, Marcus receives a loan commitment at 7.0% and immediately notifies the seller that he is invoking the contingency to cancel the contract. Under West Virginia contract principles, what is the most likely outcome?
Correct Answer
A) Marcus may cancel the contract and recover his earnest money because the contingency condition was not satisfied
The financing contingency expressly required a mortgage commitment at 6.5% or below. Marcus received a commitment at 7.0%, which does not satisfy the specific condition stated in the contract. Because the contingency condition was not met, Marcus is entitled to invoke the contingency, cancel the contract, and recover his earnest money deposit. The purpose of a financing contingency is to protect the buyer when the specified financing terms cannot be obtained.
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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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