When there is a third - party lender , a home improvement contract is unenforceable against the buyer per the Contractors License Law and federal Truth in Lending Act , if:

When there is a third - party lender , a home improvement contract is unenforceable against the buyer per the Contractors License Law and federal Truth in Lending Act , if:

• A. Obtaining a loan is a condition precedent to the contract, and the loan is not offered and/or accepted
• B. The loan is offered and accepted
• C. The buyer defaults
• D. The lender is not licensed

Answer: (A)

The key idea is how financing affects enforceability. If a home improvement contract relies on obtaining a loan from a third party as a prerequisite for the deal, the contract only binds the buyer once that loan is actually offered and accepted. When obtaining that loan is a condition precedent and no loan is ever offered or accepted, the financing contingency isn’t met, so there isn’t a binding obligation to perform. In that situation, the contract can’t be enforced against the buyer under the Contractors License Law and Truth in Lending Act—the buyer isn’t committing to pay or proceed without financing being in place.

If a loan is offered and accepted, the financing contingency is fulfilled and the contract becomes enforceable (the contractor can pursue performance or remedies if there’s a breach). If the buyer defaults after financing is in place, the issue is breach and remedies, not the unenforceability created by a missing financing contingency. If the lender isn’t licensed, that raises separate regulatory concerns but doesn’t by itself create unenforceability due to the financing contingency described.