Q & A: Can Buyer Cancel if the Seller Discloses New Information During Escrow?

Q: Doug I am currently in escrow on a home. The seller has provided the disclosures prior to our making an offer, and we have removed all contingencies. A week before closing, the seller informed us that the family room addition was done without permits. This is very upsetting to us because we already removed our contingencies, and were under the impression the addition was done legally. We don’t feel comfortable buying a home that was expanded without permits. Can we cancel the purchase? Jim in Pleasanton

 

A: Jim that is a great question. Real Estate law dictates that the seller disclose all material facts about the property. In the event the seller discloses a material fact after the contract is ratified, it generally triggers an automatic 3 day right of recession for the buyer, even if the seller offers to remedy it. So if in fact the seller makes a new disclosure, you as a buyer are generally within your rights to cancel the agreement as a result. This is why it is so important for sellers to provide complete and accurate disclosures as soon in the process as possible, preferably before a buyer makes an offer. As always, you should seek legal advice about your specific situation, as every situation is different. Good luck!