Maryland Home Improvement PSI Practice Exam

Which circumstance would NOT justify a party's insistence on mutual release papers after an offer has been accepted?

1. The buyer finds a better property for better terms.

2. A title defect that will take months to clear is discovered.

3. A basement fire causes damage that requires extensive repairs.

4. The buyer is unable to obtain financing that meets the terms of the contract's financing contingency.

The correct answer is: The buyer finds a better property for better terms.

The situation where a buyer finds a better property with better terms does not justify the insistence on mutual release papers after an offer has been accepted. Once an offer is accepted, both parties typically enter into a binding agreement, and the buyer's desire to pursue a different opportunity is not inherently a legal reason to terminate that binding contract. In contrast, the other scenarios involve significant issues that directly impact the feasibility or legality of completing the original agreement. A title defect that takes months to clear represents a legal impediment to the transaction, making completion impractical. Similarly, a basement fire causing extensive damage means the property is no longer in the condition initially agreed upon, which could violate the terms of the contract. Lastly, being unable to secure financing that meets the agreed terms is often addressed in financing contingencies, which provide a proper legal avenue to withdraw from the agreement if financing cannot be obtained. These conditions constitute legitimate, often unavoidable circumstances that could warrant a mutual release, unlike simply preferring a different property.