CATEGORY: Contracts (Cancellation)
TITLE: A Buyer May Communicate Intent To Cancel Based On An Inspection Via Email
The buyer and the seller entered into an AAR Residential Resale Real Estate Purchase Contract (“Contract”) for the purchase of real property. The buyer inspected the property and decided to cancel the Contract. The buyer timely submitted the Residential Buyer’s Inspection Notice and Seller’s Response (“BINSR”), but failed to include the items disapproved. However, the buyer submitted the BINSR by way of an e-mail and the body of the email identified issues with the property and indicated that the buyer intended to cancel the Contract.
Is the buyer entitled to a return of their earnest money even though the BINSR was not properly filled out?
Section 6(j) of the Contract provides that if a buyer disapproves of items the buyer shall deliver seller notice of items disapproved of and state that the buyer elects to immediately cancel the Contract. Section 8(m) of the Contract provides that notice can be made via electronic message. Here, the buyer failed to properly comply with the terms of the BINSR by not listing items disapproved. However, the buyer did provide an e-mail to the seller during the inspection period indicating defects with the property and stating their intent to cancel. This is deemed valid cancellation under the Contract and the buyer is entitled to a return of their earnest money.
CATEGORY: Contracts – General
TITLE: Buyer May Waive The Appraisal Contingency And Proceed With Closing
The buyer and seller executed an AAR Residential Resale Real Estate Purchase Contract (“Contract”) which was contingent upon financing. The Contract further provided that the appraisal was to be completed by a specific date. The appraisal was not completed by the deadline and the seller gave a cure notice to the buyer as a result. The buyer has now agreed to waive the appraisal contingency in the Contract.
Does waiving the appraisal contingency cure the non-compliance alleged by the seller?
The party in whose favor a contingency operates is free to waive the contingency and proceed with the Contract. The buyer therefore may waive the appraisal contingency and proceed with the closing. With that waiver in place, there is no need for a copy of the appraisal to be provided. Accordingly, waiving the contingency would likely cure the non-compliance alleged by the seller.