July 9th, 2018 at 10:51 am

Question: I am the buyer’s agent for a pending sales transaction. My buyer has already removed all contingencies. The listing agent has now called to tell me that someone just broke in and ransacked the home. My buyer wants to cancel. The Residential Purchase Agreement (RPA) requires the seller to disclose any new material fact on an amended Transfer Disclosure Statement (TDS), which then allows my buyer to cancel and keep the deposit as provided in paragraphs 10A(6) and (7). But in our situation, the seller refuses to provide an amended TDS. He claims that the existing TDS stating “yes” he was aware of “neighborhood noise problems or other nuisances” is adequate, despite the fact that the break-in occurred after he gave us that TDS. Can my buyer cancel and keep the deposit? 

Answer: Yes, most likely. If this matter became a full-blown legal dispute, a judge, jury, or arbitrator is highly likely to consider a crime recently committed at the home to be a new material fact affecting the value or desirability of the property. Also, the seller’s disclosure of other “neighborhood noise problems or nuisances” on the existing TDS is not the same thing as disclosing this recent burglary. Hence, the seller’s failure to provide an amended TDS as required under paragraph 10A(6) will likely be deemed a breach of contract. Although the buyer technically needs to receive an amended TDS to cancel according to paragraph 10A(7), the law generally will not allow a contractual party to benefit from his or her own breach of contract. The buyer should prevail in cancelling and receiving the deposit back, even without an amended TDS. Hopefully you can solicit the help of the listing agent to get the seller to understand these points and agree to sign a Cancellation of Contract.

-Thank you to Nicki Marcellino (La Jolla Manager) for suggesting this week’s legal tip.

Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of July 9, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.

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