November 28th, 2022 at 11:43 am
Multiple Choice Question: What is the legal effect of the NBP? Pick the best answer:
A. The notice is valid.
B. The notice is valid with respect to the inspection contingency, but invalid with respect to the loan contingency.
C. The notice is invalid and void.
D. It depends on whether Day 17 is a Saturday, Sunday, or legal holiday.
Answer: Answer A is wrong. A seller cannot serve an NBP any earlier than 2 calendar days before the expiration of a contingency period (see paragraph 14E of the RPA). In this situation, the seller can serve an NBP on Day 14 to require the buyer to remove the inspection contingency. But the seller cannot serve an NBP until Day 15 to require the buyer to remove the loan contingency.
Answer B is wrong, and Answer C is the best answer. For a long time, the RPA did not address the legal effect of an NBP when part of the notice is valid, but another part is invalid. That issue was finally resolved with the December 2021 revision of the RPA. The boilerplate language in the RPA now says that, if an NBP “is incorrectly Delivered[,] the notice shall be deemed invalid and void, and [the seller] shall be required to Deliver a new” NBP (see paragraph 14E).
Answer D is wrong. An NBP can be served up to 2 calendar days before the day that an applicable contingency period will expire, regardless of whether that expiration day falls on a Saturday, Sunday, or legal holiday. (see paragraph 14E of the RPA).
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