A developer in Atlantic City registered a new condominium project under PREDFDA and began marketing units. A buyer signed a purchase contract and paid a $10,000 deposit but was never given the required Public Offering Statement. Eight days after signing, the buyer attempted to rescind. The developer refused, claiming the seven-day rescission period had expired. Under New Jersey law, what is the most accurate outcome?
Correct Answer
A) The buyer's rescission is valid because the seven-day period did not begin until the POS was delivered
Under PREDFDA (N.J.S.A. 45:22A-21 et seq.), the seven-day right of rescission begins running only after the buyer actually receives the Public Offering Statement. If the developer never delivered the POS, the seven-day period never commenced, and the buyer's rescission right remains active. The developer cannot use the failure to comply with its own statutory obligation to cut off the buyer's rescission right. The buyer's rescission is valid, and the developer must return the $10,000 deposit in full.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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