Can a strikethrough in Form 2-T make the contract contingent on the buyer’s obtaining a loan?

QUESTION: Before submitting his offer, my client crossed out the note in paragraph 5 of the Offer to Purchase and Contract (Form 2-T) that reads:

NOTE: Buyer’s obligations under this Contract are not conditioned upon obtaining or closing any loan. Some mortgage loan programs and Down Payment Assistance programs selected by Buyer may impose additional repair obligations, conditions or costs upon Seller or Buyer, and more information may be needed.

The buyer believes this revision will protect his Earnest Money Deposit if he cannot obtain a loan. Is he correct?

ANSWER: No. Form 2-T provides the buyer a right to terminate during the Due Diligence Period for any reason or no reason. If the buyer does not terminate during the Due Diligence Period, regardless of the status of their loan, they will likely forfeit the Earnest Money Deposit to the seller if they do not complete the transaction.

Paragraph 4 of Form 2-T specifically states that the buyer’s pursuit of a loan is part of their due diligence obligations. Crossing out the note as you describe does not alter the buyer’s duty to pursue a loan if they need one for the purchase. Even if the seller accepts the contract with the strikethrough you describe, the buyer’s failure to obtain a loan will not give them the right to terminate outside the Due Diligence Period.

In the future, if you have a client who wants to alter the pre-printed terms of the contract, be sure to advise them to seek legal counsel. Often the best way to alter a standard form is through a carefully drafted addendum by an attorney. If you are representing a seller who receives an altered standard form contract, either by strikethrough or an attorney-drafted addendum, be sure to advise the seller to seek legal counsel before they accept the offer.

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