A Minnesota buyer, Grace, entered into a purchase agreement for a rural property. After signing, Grace discovered that the property had a non-compliant subsurface sewage treatment system (SSTS) that the seller had failed to disclose. The seller claims the non-disclosure was inadvertent. Under Minnesota law (Minn. Stat. § 115.55) and the Residential Real Property Disclosure Act, which statement most accurately describes Grace's remedies?
Correct Answer
D) Grace may rescind the purchase agreement or negotiate a price reduction or repair credit, and the seller's failure to disclose the SSTS status violates both the disclosure statute and the purchase agreement
Under Minn. Stat. § 115.55, sellers of property with an SSTS must disclose the system's compliance status. The Minnesota Residential Real Property Disclosure Act (Minn. Stat. § 513.52–513.60) also requires disclosure of known material defects. A non-compliant SSTS is a material defect, and failure to disclose it violates both statutes. Grace has multiple potential remedies: she may rescind the purchase agreement (particularly if the failure to disclose constitutes fraud or a material misrepresentation), negotiate a price reduction, or require the seller to bring the system into compliance as a condition of closing. Pre-closing rescission is available under the Disclosure Act.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
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