How to Cancel Real Estate Contracts Due to Mold

A buyer can cancel a real estate purchase contract for mold and other disrepairs.

In real property transactions such as a purchase of a home, the buyer and seller are bound by the provisions of the contract. A real estate contract not only identifies the principal parties, the property and terms of purchase, but puts forth rights and performances by which each party must abide. For instance, in a typical home purchase, the buyer reserves the right to rescind the contract if financing cannot be obtained. To cancel a real estate contract due to mold, you will need to contact your real estate agent or broker, the seller's representative, and give the seller an opportunity to remediate or provide a remediation allowance.

Instructions

1. Review the purchase offer and the purchase contract. In each document, there will be provisions under which the buyer and seller have the right to withdrawal the offer or cancel the contract. These are called contingencies and provide protection to both parties under the contract's "right of rescission" clause. In most purchase offers, the buyer is tendering a purchase amount, down payment, earnest or escrow monies, and closing cost arrangements. Also included in the purchase offer is the right to inspect the property for defects and a right of rescission should the home inspection report list any significant defects such as mold, leaking roof, cracked foundation, et cetera. If the purchase offer has already been accepted and mold was found after the home inspection, review the purchase contract. Just as with the purchase offer, the buyer usually reserves the right to cancel the contract if such problems are found.

2. Contact your real estate agent or broker. Once a mold problem has been discovered, you should contact your real estate agent or broker immediately. Inform them of the discovery and ask them to contact the seller's representative to negotiate a solution to the problem. You may suggest your agent or broker ask the seller's representative to have the seller pay for mold treatment remediation and postpone the closing until such time as it can be satisfactorily treated or in the alternative, have the seller give you allowance monies to cover the cost of remediation.

3. Give the seller the opportunity to address the issue. In most jurisdictions in the United States, a buyer must give the seller a chance to correct the mold issue before canceling the real estate contract. Each state's laws will differ as to the timeframe, but in general, the seller will have about 30 days to address and correct the issue; mold remediation takes approximately one to two weeks from start to finish.

4. Cancel the contract. If the seller will not agree to pay to remediate the mold or provide you with remediation monies, cancel the real estate contract by having your agent or broker rescind the contract with the seller's representative. In addition, you may want to seek advice of a local real estate attorney to advise you of your legal options.

References

• Bankrate: Can you Cancel? The Right of Rescission
• Financial Crisis 2009: How can I protect myself prior to home purchase?