What happens in Kentucky if a mortgage contingency is in effect and the buyer cannot obtain a loan?

In Kentucky, if a mortgage contingency is included in a real estate contract and the buyer is unable to secure a loan, the typical outcome is that the agreement is terminated. A mortgage contingency is a condition in the contract that protects the buyer, ensuring that they can secure financing for the purchase of the property. If the buyer cannot obtain a loan, they have the right to terminate the agreement without penalty, thereby protecting their earnest money deposit.

This scenario is key in real estate transactions as it helps mitigate risk for buyers. The presence of a mortgage contingency means that the buyer is not obligated to proceed with the purchase if their financing falls through, allowing them to back out of the agreement without facing consequences. This is an important protection mechanism in the buying process.