ISSUE:

In the Listing and in the Contract the seller is selling a home with a “Guest House” in the backyard. After the Inspection Period and just prior to close of escrow, the seller and the buyer learn that the “Guest House,” which is a modified travel trailer, violates the building code and cannot be used as a living area. Although the Inspection Period has expired, can the buyer cancel the transaction?

ANSWER:

Probably. If the seller learns that the travel trailer is not legal under the building code as a living area, the seller is probably required to update the SPDS. The buyer would then have five days to cancel the Contract and receive the return of the earnest money.