April 21st, 2025 at 2:30 pm
Multiple Choice Question: What must the buyer do to stop the seller from cancelling? Pick the best answer:
A. Remove all contingencies, including the loan contingency.
B. Remove all contingencies, except the loan contingency.
C. Nothing.
D. Inform the seller’s side that the NBP is defective.
Answer: Answer A is wrong. An NBP must give the buyer a notice of at least 2 days to remove contingencies, otherwise the seller can cancel the agreement (see paragraph 14C(1) of the RPA). The seller, however, cannot serve an NBP until 2 days before the contingency period is over (see paragraph 14E).
In this situation, the NBP served on the 17th day was timely served with respect to all contingencies with a 17-day contingency period. But the buyer also had a 20-day loan contingency. The NBP served on the 17th day was delivered one day too soon with respect to the loan contingency. The buyer is not required to remove the loan contingency yet.
Answer B is the correct answer. If an NBP is for multiple items, the notice shall be valid for those contingencies for which the NBP was timely served, and void as to the others (see paragraph 14E of the RPA). In this situation, the NBP is valid for all contingencies other than the loan contingency. The buyer should remove all contingencies other than the loan contingency to prevent the seller from cancelling.
Answer C is wrong. It’s true that the NBP served on the 17th day is defective with respect to the 20-day loan contingency. But the RPA clarifies that the NBP is still valid for those contingencies for which the NBP was timely served (see Answer B above).
Answer D is wrong to the extent that informing the seller about the defective NBP does not change what the buyer must contractually do to stop the seller from cancelling. However, in practice, there are situations where a buyer, who has received NBP #1 to remove all contingencies, needs more time before removing the 17-day contingencies (other than the 20-day loan contingency). In that situation, the buyer’s agent may want to try to convince the seller’s side to reissue another NBP #1 altogether as a way of getting the buyer a little more time.
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