Expert: liznarr - 12/12/2009

Question
I have signed a contract on a residential home; however, upon the home inspection and termite inspection, there were more problems with the home than what I was made aware. Example, mold all under the house (the house as been vacant for 2 years), the garage and storage building have serious termite damage (termites are not visible now), plus the entire floor needs to be replaced. I just do not get a good feeling about purchasing this house after all, can I get out of the contract?

Answer
Hi Holly,

Not having read your Contract of Sale, I cannot answer your question specifically.  I can, however, point you in the direction of some things you can do.

Since you did an inspection, your Contract must have addressed your right to do this.  Check your inspection clause and try to determine if you have the right to terminate the Contract if the inspection is unacceptable.

If you do not have an out under the inspection clause – or another clause in your Contract -- you probably should consult with an attorney ASAP to see what other, if any, legal outs you have per your Contract of Sale.  

Hopefully, you did NOT agree to purchase this house as-is.  If you did agree to purchase as-is, the next thing I would hope is that your Contract is subject to financing.  If it is, you should immediately make your lender aware of all the issues.  The lender might decline to fund the loan based on the serious termite damage and other structural issues unless it is corrected prior to closing.  Thus, subject to financing means that without your lender’s funds to purchase, there will be no closing; and your earnest money should be refunded and the Contract terminated.

If there are no legal outs in your Contract, have an Addendum prepared and simply ask that you be released from the Contract due to the severity of the damages disclosed by your inspections.  The Seller might agree to do this, with or without refunding your earnest money, but sounds like it would be better to lose some earnest money than to go forward with a house you feel totally uncomfortable with.

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth