A buyer submits an Agreement of Purchase and Sale for a residential property with a financing condition. The seller accepts the offer. If the buyer is unable to secure satisfactory financing within the stipulated timeframe, what is the most common outcome if no extension is granted?

Question: A buyer submits an Agreement of Purchase and Sale for a residential property with a financing condition. The seller accepts the offer. If the buyer is unable to secure satisfactory financing within the stipulated timeframe, what is the most common outcome if no extension is granted?

Answer options: ✅ The agreement becomes null and void, and the buyer's deposit is typically returned.

• The buyer is legally obligated to proceed with the purchase, regardless of financing.
• The seller can sue the buyer for specific performance to complete the transaction.
• The buyer forfeits the entire deposit to the seller as liquidated damages.

Correct answer: The agreement becomes null and void, and the buyer's deposit is typically returned.

Explanation: If a financing condition is not fulfilled or waived by the buyer within the specified time, and no extension is agreed upon, the Agreement of Purchase and Sale typically terminates, and any deposit held in trust is returned to the buyer. This is because the condition precedent was not met, making the contract voidable by the buyer.