Profile picture for XuanZhang

After home inspection, can I cancel my contract and keep my deposit

I am in new jersey and my contract says "in the event parties can not agree on any repair issue, buyer has right to cancel the contract" We put down 18k as deposit.....

Inspector found mold on the wall in the furnace room and many other issues. Seller only agrees to remove the mold and did not mention whether they are going to hire professionals or do it herself (we ask seller to hire a certified contractor to remove). And also, seller only offer $500 credit (which is obviously not enough).

Our attorney told us we can not get our deposit back unless seller agrees to cancel the contract..... But to my understanding, we can cancel the contract by home inspection contingency.....
 
My question is can we walk away and get our deposit back 
  • June 13 2014 - Princeton Township
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Answers (9)

Profile picture for bcortez23
Hi Xuan, we are in the same boat, we found mold and leaks in our attic and other big issues. I was wondering how you ended up with this process because there are definitely ways to get out of the contract, but I think that you will not get this info if your lawyer works with the Realtor, e.g. if she/he referred you there and because some lawyers do not want liability for telling you can delay on the loan process or request the money you need, which the seller will not accept most likely and back down themselves. In our case, we love the house, but our Realtor has not been the greatest and we payed a lot for a house we expect to be in good condition for several years to come. As it stands, we could end up spending over 25k in fixing items that are not visible to the eye and for items that were not taken care of by any of the past 2 owners in the past 20 years. If we can, we will want to keep the house for no less than 1/2 what the costs of fixing all the issues will be, and we are willing to lose this house if the seller thinks it is our responsibility to flip their bill.
  • January 14
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Your lawyer is not misleading you; he/she has to set you up to understand that it is a gray area, and it may not definitely work out the way you want. Not all mold is toxic to humans, secondly there are acceptable levels in a home. If the mold is not harmful, the home can still function as a home. 

The home inspection is a useful tool; you find out as much info as you can about a place going forward, you can also find any detriments in a home. You also have to remember the slant a home inspection report is written in: you're paying a professional to find all things that are wrong. Some inspectors write up every possible thing that is wrong with a dwelling, some only write things of particular interest. They also (unless secondarily certified) are probably not mold experts (nor am I); liability wise they have to recommend remediation even if benign. 

At the end of the day here's how it shakes out: if the home cannot function as a home or if you can't get financing because of a condition, you should be able to void the deal and receive deposited money back. If it can still function as a home, and you can obtain a CO/CCO then its negotiating time. Also dependent upon timelines laid out in the contract. 

To also echo Peter J Rogers comment, I don't advise my clients to escrow any more money than the initial deposit until all home inspections are concluded. 

Good Luck
  • June 23 2014
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I am a Realtor in NJ and have NEVER had a client loose their deposit due to home inspection issues that could not be resolved to both parties satisfaction.
  • June 15 2014
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I'm a Realtor, so this should not be taken as legal advice.
You and the seller have agreed upon specific terms.  And since contract law tends to be black and white, it should be a no brainer.  Your contract calls for the option to have an inspection done.  You exercise your option to have the inspection done and find out there's a mold issue.  You exercise your option to require it to be resolved by a mutually agreeable manner.  This mutual agreement is a contract agreement within the main contract.  If you don't come to an agreement, then you have the option to cancel or accept the situation and continue with the rest of the contract.  Ofcourse, if you are going to need a mortgage, you may not be able to get it with an unresolved mold issue.  And yes, it's now becomes a material fact and must be relayed to the mortgage lender.  Also, if a CO is required, it won't happen with a mold issue.  And if it goes to that point and you are still hanging in, you could notify the building department to mention to the inspector that a mold issue was found and may not have been correctly resolved.  

Based on my experience as a former general contractor, dealing with consumer law requirements, the repairs must be done properly to safeguard the public safety.  That ends up meaning that a repair of mold must be done completely, and reguardless of who does the remediation, a certified inspection  with clearance of the issue must be provided.  Because of the wording of the contract, as you have listed it, you would also have the option to dictate the resolution uses a certified mold remediation company and provide a certified inspection report.  But that would be another option for you to decide on.

Best of luck.
  • June 14 2014
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Profile picture for XuanZhang
We have 14 days to do inspection, and another 7 days for seller to to response repair problems. We are at day 10 now
  • June 14 2014
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Check see how many days you have specified for inspection, if time has elapsed it is over for you. In California it is at the discretion of seller.

 $18K is a lot of money sometime you have to bite the bullet and move into the home.  One thing I would ask is a home warranty to cover some of the repairs. 

A good realtor can always spot a trouble home and recommend cost saving fixes. It sounds like your realtor was not on your side serving your needs.


Sam Shueh
KW Realty
Cupertino, CA

 
  • June 14 2014
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Profile picture for XuanZhang
we put deposit at our attorney's trust fund. She said if the buyer feels we are not reasonable and refuse to sign the release, we can not get our money back....We are so frustrated as first time buyer...I am not sure whether this is a New Jersey thing or the lawyer is misleading us....
  • June 14 2014
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Profile picture for Peter J Rogers
Firstly we usually advise our buyers not to pay the deposit until the inspections are done precisely to avoid the situation you are now in. Both the deposit and the inspections are supposed to be taken care of within 10 days of the end of attorney review so we make sure the inspection is done as quickly as possible. Then if there are any serious issues raised they can be resolved before you hand over any money.
You most certainly are entitled to your deposit back if the seller refuses to correct any inspection issues so I have no idea where your attorney is coming form.
 
  • June 14 2014
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I have experience this problem many times and my borrowers had no problem cancelling the contact and getting their deposit money back.  You have a inspection contingency for this reason. 
  • June 14 2014
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