January 13th, 2025 at 7:21 pm
Answer: Yes, possibly so. The RPA generally requires a seller in a pending transaction to disclose to the buyer any adverse condition materially affecting the property (see paragraph 11A(4)). The agreement also generally allows the buyer who receives such disclosure to cancel within 3 to 5 days (see paragraph 11G(1)).
However, once the buyers submit a request to cancel, we do not know exactly how the seller in any given situation will respond, or how this situation will ultimately play out. Some sellers will agree to cancel, whereas others may try to stand in the way. They may, for example, try to argue that the fires are not near enough to the subject property to constitute a material fact. They may also try to argue that a subsequent disclosure is not required for conditions “for which Buyer is otherwise aware” (see paragraph 11A(4)), even though that’s just what the RPA says, and not what the TDS law says. They may also try to argue, depending on the circumstances, that the buyers are acting in bad faith. They may even give no reason at all for their refusal to cancel the agreement and release the deposit to the buyers.
Agent’s Role: As the agent involved in this type of situation, please be very careful not to give your own clients any assurances one way or the other as to how this dispute will be resolved. If the buyer and seller cannot easily resolve their differences with each other, please encourage our clients to consult with their own attorney as they deem fit. Ultimately, if this situation needs to be resolved through the legal process, the decision of what to do with the contract and the deposit must be made by a judge or arbitrator (and not by us).
Stay Safe Everyone! My heart goes out to everyone affected by the L.A. fires. We will rebuild, and we will overcome.
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