Am I bound to closing regarding an undisclosed condition?
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Am I bound to closing regarding an undisclosed condition?
I signed purchase agreement with real estate property listed said it had a well and septic but condition
of them were unknown. Now just before we are ready to close real estate agent told me there is no
septic. Can they keep my deposit or can I renegotiate the price now knowing that it has no septic system at all?
Asked on June 13, 2017 under Real Estate Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
You are not bound to an agreement when such an important fact is not as was disclosed. If the seller or the agent knew there was no septic but nonetheless claimed there was one, they committed fraud, and fraud provides a basis for escaping (voiding) a contract. And if they did not know, then both sides were mistaken as to the nature of the property, and a mutual mistake as to an important or material fact likewise allows a contract to be voided or at least "reformed"--e.g. adjusted (by a court, if necessary, the parties cannot agree) to reflect the true state of affairs, which could include, a reduction in purchase price to the value of a like property without septic. In any event, you are not bound to the contract as is given this material error.
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