Final answer:
The cash surrender value is the refundable amount to a buyer when an installment purchase contract of a property is cancelled. It is based on the payments made and any agreed terms within the contract. Market fluctuations can affect property values and may complicate the determination of this value.
Step-by-step explanation:
The cash surrender value for buyers whose contracts for the installment purchases of real property were cancelled is typically the amount of money a buyer can recover from their payments made on a real estate contract if the contract is cancelled before the property's full ownership is transferred. For example, if a party buys a house using installment payments and the contract is cancelled, there may be provisions within the contract itself dictating the amount to be refunded. Such provisions usually take into account the payments made minus any fees or penalties for contract cancellation.
In a broader context, the cash surrender value is an important consideration during periods of fluctuating property markets. For instance, if the property market experiences a downturn, as it did starting in 2005 leading up to 2007, the value of the properties might decrease significantly compared to the original loan amount, which can complicate determining the cash surrender value if a buyer wants to cancel their installment plan.