Question

Would you explain what it means if Form 22A, paragraph 3(c) is left unchecked?

Answer

Form 22A, paragraph 3, is the provision of the buyer's financing contingency that invites seller to deliver to buyer a Notice of Right to Terminate. Upon receipt of seller's notice, buyer has three days to determine that buyer will waive buyer's financing contingency. If buyer does not waive the financing contingency, then seller may terminate the PSA. If buyer does waive the financing contingency, seller may not terminate the PSA but buyer no longer has the protection of the financing contingency. Form 22A, paragraph 3(c) comes into play ONLY when buyer waives the financing contingency based on seller's notice of right to terminate. When buyer waives the financing contingency based on seller's notice of right to terminate and the "will" box is marked on paragraph 3(c), then when buyer waives the financing contingency, buyer also waives the protection of the low appraisal provision (paragraph 7) of the financing contingency. However, when buyer waives the financing contingency based on seller's notice and the "will not" box is marked on paragraph 3(c), then when buyer waives the financing contingency, buyer will NOT waive the protection of the low appraisal provision (paragraph 7) of the financing contingency. If the "will not" box is marked on paragraph 3(c), buyer can waive the financing contingency following receipt of seller's Notice of Right to Terminate and still retain the right to negotiate/terminate the PSA, as set forth in Form 22A, paragraph 7, upon receipt of a low appraisal. To answer the specific question asked ... paragraph 3(c) defaults to "will". If buyer wants the ability to preserve the low appraisal provision upon waiver of the financing contingency, buyer must mark the "will not" box on Form 22A, paragraph 3(c). If buyer does nothing with Form 22A, paragraph 3(c), then when buyer waives the financing contingency following receipt of Seller's Notice of Right to Terminate, buyer's low appraisal protection will also be waived.

Date of Posting

9/15/2020

Legal Disclaimer

The Legal Hotline Lawyer does not represent Washington REALTORS® or its members. The advice contained herein does not constitute legal counsel. Please consult with your managing broker for best practices.

Association Name

WASHINGTON ASSOCIATION OF REALTORS®