A purchase and sale agreement in Maine is executed for a home priced at $320,000. The sellers are a retired couple who have lived in the home for 20 years. After signing the agreement, the sellers' broker discovers that the sellers failed to disclose a known leaking basement that they had temporarily patched before listing. Under the Maine Seller Disclosure Act, what is the most accurate statement about the sellers' obligation?
Correct Answer
B) The sellers must amend the disclosure statement to reflect the known defect, and the buyer may have the right to rescind
Under the Maine Seller Disclosure Act (33 M.R.S. §§ 173–174), sellers of residential real property are required to disclose known material defects. A leaking basement that was temporarily patched is a known material defect that must be disclosed. If the disclosure statement was incomplete or inaccurate, the sellers have an obligation to amend it. When a material defect is disclosed after contract execution, the buyer may have grounds to rescind the contract or renegotiate terms. The duty to disclose survives contract execution.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
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