If the resale results in a higher price than the original contract, the former buyer is liable for the shortfall.

If the resale results in a higher price than the original contract, the former buyer is liable for the shortfall.

• A. The former buyer is liable for the excess.
• B. The seller can claim the excess from the buyer.
• C. The former buyer has no liability for any excess due to a higher resale price.
• D. The deposit must be returned.

Answer: (C)

The key idea is liability for a shortfall when a secured property is sold after default. The borrower’s obligation kicks in only if the sale price is less than what is owed on the contract. If the resale price is higher than the amount owed, there isn’t a shortfall to recover; the lender settles the debt and any excess goes to the borrower (after costs are covered). So, if the resale results in a higher price, the former buyer does not owe anything extra because there is no shortfall to pay. The surplus, not a liability, belongs to the buyer. The other options aren’t correct because they imply the borrower must pay or that other actions (like returning the deposit) are mandated in this scenario, which isn’t the standard rule in this context.

The key idea is liability for a shortfall when a secured property is sold after default. The borrower’s obligation kicks in only if the sale price is less than what is owed on the contract. If the resale price is higher than the amount owed, there isn’t a shortfall to recover; the lender settles the debt and any excess goes to the borrower (after costs are covered).

So, if the resale results in a higher price, the former buyer does not owe anything extra because there is no shortfall to pay. The surplus, not a liability, belongs to the buyer. The other options aren’t correct because they imply the borrower must pay or that other actions (like returning the deposit) are mandated in this scenario, which isn’t the standard rule in this context.