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Clause cancels the contract

Published Oct. 18, 2005

Question: Our home had been listed for sale almost three months before we finally received a purchase offer from a buyer. I suppose we were so happy to get an offer we didn't pay attention to the details. The problem is the offer says, "Offer contingent upon buyer obtaining the maximum mortgage available at the current market interest rate and best available terms." The buyer applied with three lenders and was unable to qualify for a fixed-rate mortgage. He can get an adjustable rate mortgage, but says he wants only a fixed rate mortgage. Since he can't get a fixed rate home loan, he refuses to go through with the sale and wants his $2,000 earnest money refunded. He has wasted more than 30 days trying to get a new mortgage. Should let him out of the contract? _ Jess W. Answer: Your situation is a classic example of how inexact home purchase offer terms can create misunderstandings and cause uncertainty for buyer and seller. The buyer was apparently referring to a fixed rate mortgage, but you were thinking of any mortgage.

Since the contract didn't specify any type of mortgage, it appears there was a mutual mistake which would allow the buyer to rescind the contract for lack of mutual agreement.

The mortgage contingency clause in your home sale contract was so poorly written if either party went to court to enforce the contract the judge might say the contract was unenforceable, since the terms are not certain. If I were in your situation I would refund the $2,000 and put your home back on the market for sale.

Write Bruss c/o At Home, St. Petersburg Times, P.O. Box 1121, St. Petersburg, Fla. 33731.