Alicia contracted to buy a townhouse in Arlington for $680,000. After the inspection, she discovered undisclosed water damage and believes the seller, Tom, committed fraud by concealing it. Alicia wants to cancel the contract and recover her $15,000 deposit plus her inspection costs. Which remedy is most appropriate for Alicia to pursue under Virginia law?
Correct Answer
B) Rescission and restitution, canceling the contract and recovering all amounts paid
When a contract is induced by fraud or material misrepresentation — such as a seller concealing known water damage — the defrauded party may seek rescission and restitution. Rescission cancels the contract as if it never existed, and restitution requires the return of all consideration paid, including the deposit and out-of-pocket costs like inspection fees. This remedy is appropriate when Alicia wants to walk away rather than proceed with the purchase.
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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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