A buyer in New Hampshire signs a purchase and sales agreement for a residential property and pays a $15,000 earnest money deposit. The agreement contains no inspection contingency. After the home inspection reveals significant structural problems, the buyer attempts to terminate the agreement citing the NH Consumer Protection Act (RSA 358-A), arguing the seller engaged in deceptive practices by not disclosing the structural issues on the Residential Property Disclosure Form. The seller had marked 'unknown' for structural conditions on the disclosure form. Which analysis most accurately describes the buyer's legal position?
Correct Answer
C) The buyer faces significant risk of losing the earnest money deposit because there is no inspection contingency; a RSA 358-A claim requires proving the seller knowingly engaged in deception, which 'unknown' markings do not automatically establish.
Without an inspection contingency, the buyer has no contractual right to terminate based solely on inspection findings. To succeed under RSA 358-A (the Consumer Protection Act), the buyer must prove the seller engaged in unfair or deceptive acts — which requires showing the seller knew of the defects and intentionally misrepresented or concealed them. A seller marking 'unknown' on the disclosure form, if truthful, does not automatically constitute deception under RSA 358-A. The buyer faces the very real risk of losing the $15,000 earnest money deposit as a defaulting party if they refuse to close without a valid contractual basis for termination. This scenario illustrates why inspection contingencies are critical in NH purchase agreements.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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.
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