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Question:
Margaret buys a home from Daniel. Under the terms of the purchase, Margaret assumes Daniel’s existing loan. The lender consents, issuing a substitution of liability. What best describes the outcome of this arrangement?
A
Daniel is relieved from liability and further performance under the loan.
explanation
Under a substitution of liability agreed to by the lender, Daniel, as the original borrower, is fully relieved from liability and further performance under the loan. Only Margaret, the party assuming the loan, is liable.
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