Often callers have questions about the Third Party Financing Addendum (TAR 1901, TREC 40-7), in particular the difference between the “Buyer Approval” and “Property Approval” paragraphs. If a lender denies the buyer’s loan because of his credit history, income, or assets, this falls under Paragraph B(1), Buyer Approval, and your client must terminate within the time required by the blank in that paragraph. However, if a lender will not finance the loan because of something related to the property itself, such as a low appraisal, insurability, or lender-required repairs, this falls under Paragraph B(2), Property Approval. The time period for terminating under this paragraph is any time before closing.
Hunter Jackson, associate counsel