November 22nd, 2021 at 1:29 pm
A. Yes.
B. Yes, but only because their lender said “yes.”
C. Yes, because the buyers cannot control what their parents will do.
D. No.
Answer: Answer A is wrong. Under paragraph 3J(2) of the RPA, even though the buyers have a loan contingency, their “contractual obligations regarding deposit, balance of down payment and closing costs are not contingencies of this Agreement.”
Answer B is also wrong, because the lender cannot dictate the terms of the RPA. If, however, regardless of the buyers’ inability to come up with their down payment, the lender nevertheless declines the buyers’ loan due to, for example, the buyers’ own income and credit, then the buyers may be able to cancel under their loan contingency.
Answer C is also wrong. It’s true that what the buyers’ parents do is not within the buyers’ control. But the buyers’ rights and obligations under the RPA are not necessarily based on what is or is not within their own control.
Answer D is the correct answer!
-Thank You to Clara Eisenman (Tustin Office Manager) for suggesting this week’s legal tip!
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