Helen is selling her Jackson, Tennessee home. She accepts an offer from Paul that includes a property condition disclosure contingency. Helen delivers the Tennessee Residential Property Condition Disclosure form before the contract is executed. After signing, Paul discovers through his own research that the property is in a flood zone, a fact Helen did not disclose on the form. Paul attempts to invoke the three-day rescission right under Tenn. Code Ann. § 66-5-201 et seq. Which of the following most accurately describes Paul's legal position?
Correct Answer
D) Paul cannot invoke the three-day statutory rescission right because the disclosure form was delivered before contract execution; however, he may have other legal remedies for non-disclosure of a material fact
Under Tenn. Code Ann. § 66-5-201 et seq., the three-day statutory rescission right is specifically triggered when the Property Condition Disclosure form is delivered after the contract is executed. Because Helen delivered the form before contract execution, the statutory three-day rescission right is not available to Paul. However, Paul may still have other legal remedies—such as a claim for misrepresentation, fraud, or breach of contract—based on the seller's failure to disclose a known material fact (the flood zone designation). These remedies are separate from the statutory rescission right.
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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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