David is under contract to purchase a residential property in Portsmouth, New Hampshire. After the purchase agreement is signed, David's home inspector discovers that the septic system is failing and will require complete replacement at an estimated cost of $25,000. The Residential Property Disclosure Form indicated the system was 'functioning normally.' Which of the following actions is MOST appropriate for David to take?
Correct Answer
D) David should consult with his agent and attorney to negotiate a price reduction, seller-paid repairs, or termination based on the inspection contingency.
When a home inspection reveals a significant defect (such as a failing $25,000 septic system) that contradicts the seller's disclosure, the buyer's most appropriate course of action — assuming an inspection contingency is in place — is to work with the agent and attorney to negotiate a resolution. Options typically include a purchase price reduction, seller-paid repairs, or termination of the agreement with return of the earnest money deposit. The discrepancy between the disclosure and the inspection finding may also give rise to a misrepresentation claim.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
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.
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