A buyer signs a California Residential Purchase Agreement to purchase a home for $1,100,000. During the 17-day inspection contingency period, the buyer's inspector discovers extensive termite damage that was not disclosed by the seller on the Transfer Disclosure Statement, as required by California Civil Code §1102. The contingency period has not yet expired. What is the buyer's best course of action to cancel the contract and recover the earnest money deposit?

Correct Answer

C) Serve the seller with a written cancellation notice before the inspection contingency deadline and request a full refund of the earnest money deposit

Under the standard California RPA, the buyer has an inspection contingency period — typically 17 days — during which the buyer may cancel the contract for any reason related to the physical condition of the property by delivering a written cancellation notice to the seller before the contingency deadline. The seller's failure to disclose the termite damage on the TDS may also constitute a violation of Civil Code §1102, strengthening the buyer's position. By cancelling in writing before the contingency expires, the buyer is entitled to a full refund of the earnest money deposit without penalty.