What are the terms under which a seller can terminate a contract in regards to the buyer’s appraisal?
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What are the terms under which a seller can terminate a contract in regards to the buyer’s appraisal?
We received notice of termination from our seller on word of mouth appraisal information. We have not even received the appraisal report back from the underwriters yet. Is this legal? The lender gave a tip to our real estate agent that there were 2 minor conditions to the loan regarding the appraisal in hopes to speed things up and get the issues resolved quickly. We the buyers in hopes to keep things moving quickly offered to cover the expenses, hire the contractor, and get the 2 minor issues resolved in a very timely manner as to not effect any dates or deadlines whatsoever. Again, we haven’t even seen the appraisal report it is still in the hands of the underwriters. The seller already has sent us the notice of termination and earnest money release forms. How is this possible
legally?
Asked on June 9, 2017 under Real Estate Law, Colorado
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
What does the contract of sale state--that determines your rights here. If the appraisal contingency states the contract may be terminated if the home does not appraise for a certain value and it in fact does not, then they can terminate the agreement. If on the other hand, the terms in the contract about appraisal do not let them terminate under these circumstances, they cannot terminate it and must instead go through with the sale. You need to reference the contract's exact language: that will control this situation and determine what, if anything, you may do.
Also bear in mind that even if legally, they could not terminate the sale, if they refuse to reinstate it, you would have to sue them for a court order forcing them to go ahead with the sale, which can take time and can be costly (e.g. you hire an attorney), so you need to think carefully about whether it is worth doing this.
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