1. A financing contingency in a purchase agreement protects the:
Answer & explanation
Answer: C. A financing (mortgage) contingency lets the buyer cancel without penalty if unable to secure the specified loan by the deadline.
contracts
purchase agreement
A purchase agreement, also called a sales contract or agreement of sale, is the written contract in which a buyer agrees to buy and a seller agrees to sell real property on stated terms. It typically lists the parties, property description, price, earnest money, financing, contingencies, closing date, and possession. Once signed by both parties, it gives the buyer equitable title until closing.
- Exam tip
- Remember the purchase agreement must be in writing under the statute of frauds, and the buyer holds equitable title while the seller keeps legal title until closing.
- Example
- A buyer and seller sign a purchase agreement for $425,000 with $10,000 earnest money, a 30-day financing contingency, and closing in 45 days.
Related terms & state variants
Sources
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Last verified: 2026-10-23