November 4th, 2024 at 1:34 pm
Question: Can the buyer cancel as well as recover the amount of the buyer’s deposit? Yes or No?
Answer: Yes, most likely, but notice how neither the question nor answer identifies from whom the buyer can recover the deposit. That’s because, regardless of whether the buyer can get the deposit back from the seller, the buyer should have a strong claim against the buyer’s agent for mishandling the situation to the buyer’s detriment.
This situation should not have occurred. The buyer’s agent should not have advised the buyer to remove all contingences if the TDS was incomplete. Under the RPA, the TDS is not “considered fully completed” until “the Seller’s Agent, if any, has completed and Signed the Seller’s Agent’s section (Section III), or if applicable,” an AVID (see paragraph 11A(2) of the RPA). Instead of removing all contingencies, the buyer should have checked the “Exception” box in paragraph 3 of the Contingency Removal form to reserve the buyer’s right to review the completed TDS.
Putting aside the mishandling by the buyer’s agent, can the buyer recover the deposit directly as against the seller? The answer may be “yes,” depending on the circumstances. One possibility is when the listing agent’s AVID reveals a new material fact affecting the property. According to the RPA, “If Delivery of any Report occurs after a contractual contingency pertaining to that Report has already been waived or removed, the Delivery of the Report does not revive the contingency but there may be a right to terminate for a subsequent or amended disclosure under paragraph 11G” (see paragraph 14B(3) of the RPA).
-Thank you again to Jeni Bober (Brentwood Office) for suggesting this week’s legal tip!
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