A New Hampshire purchase and sales agreement for a residential property includes a clause stating: 'Seller warrants that the property is served by a municipal sewer system.' Prior to closing, the buyer discovers the property actually uses an on-site septic system. The seller claims this was an honest mistake and offers to adjust the purchase price by $3,000. Under RSA 477:4-d and general NH contract principles, what is the buyer's strongest legal position?
Correct Answer
D) The buyer may treat the misrepresentation as a material breach, potentially allowing termination of the contract and recovery of all deposits and costs.
A contractual warranty that the property is served by municipal sewer is a material representation in a NH purchase agreement. When this warranty proves false — regardless of whether the misrepresentation was intentional — the buyer has grounds to treat it as a material breach of contract. Under NH contract law and RSA 477:4-d (which requires accurate disclosure of sewage disposal type), the buyer's remedies may include termination of the contract and recovery of the earnest money deposit, as well as potential damages for costs incurred. A $3,000 adjustment offer from the seller does not obligate the buyer to accept and close.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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