Although this seems straight-forward, I would still get council from an attorney. If both parties want to cancel the contract and return your escrow, then it's no problem. It can get tricky, however, if either party still wants to go to settlement. If you want the contract to settle, then the owner must make all necessary repairs to return the home to it's original condition. If the owner makes the repairs, he could argue that you must still settle - even if you don't want to. Again, if both parties agree to part ways, then no problem. Otherwise - you need specific legal help. Good luck.
If you used a "Regional Sales Contract" or a MAR "Resale Contract" there is a property condition clause which covers two situations that may be applicable to your situation. The first is that the seller will convey the property to you in substantially the same condition that it was in at the time you contracted to purchase it. The second is that the systems, which would include plumbing, will be in working order at the time of settlement.
These two provisions could be compromised if your contract includes an "As-is" clause (on the addendum of clauses) or a separate "as-is" addendum, bank addendum (foreclosure sale or short sale) or corporate relocation addendum. Check these things out and consult an attorney.
The other question is do you want the home. Â I wouldn't expect that there is any situation here that can't be fixed to resolve the issue if you want the home. Then if you don't want the home, if the seller doesn't want to rectify the situation, you may have the ability to get out of the contract. If the seller wants to sell the home, they will need to fix it for you or the next buyer.
I am not an attorney and I'm not a contractor or home inspector and I haven't seen your contract or the damage. Therefore nothing in my statement here is legal advice or qualified opinion.
Lastly, if you want the home fixed remember that the seller is probably interested in getting it done as inexpensively as possible whereas your interest is in getting it done properly. You might want to have a contractor of your choice examine the problems for you and work out a credit from the seller so that you oversee the repairs so that they are completed to your satisfaction.
Terence Michael McCarthy
Real Estate Broker
I'm sorry for your troubles, but they really shouldn't be YOUR troubles. Most sellers would have the decency to remediate any issues prior to your settlement. Your contract will make things clear but since you have not settled yet, you are likely in a position of power!
All the best,
The fact that the transaction hasn't closed is in your favor. Since it hasn't closed the property and its multitude of problems still belong to the previous owner.
This is a most unfortunate turn of events but the purchase agreement should contain language that clarifies this issue. Indeed, if the seller really wants to sell this property.....and they have the means(including insurance), they should make this right.....
Your contract will contain the answer to your question, but chances are the others are correct; it's the sellerâ€™s responsibility. Assuming the seller is a responsible home owner, they should have some insurance which may cover this. Flood is always a difficult issue, because not all homeowner policies necessarily protect against flood damage.
Have the sellers investigate this and let you know if they have coverage. This may solve most of the problems for both of you.
Now, if the flood had happened the day after settling, the problem would be yours. Are you prepared to address the non-functioning drain system or are you better off walking away? That decision is up to you.
When this fortuitous event happened, a room for potential renegotiation opens up.
I wish you the best of luck.
If you had a realtor represent you in the purchase offer, ask him/her what your remedies are if the seller doesn't perform.
The answer really depends on your contract and what point you are at with contingencies. The seller is definitely responsible for the clean up, but repair is not as clean cut. If the house is being sold as-is, then you may be responsible for the repair. If you have a property condition paragraph in effect, you could argue the drain system falls under plumbing and it must be in normal working condition. In that case, the seller is responsible. Also, if you are getting a loan, the lender may require the repair as a condition. (Depending on the contract, the seller may refuse to make lender repairs, but you can void the contract if they won't do it.) If they "quit" and default on the contract, then you may be able to pursue legal action.
I would think the seller would try to work this out with you. If you walk away, they are going to have to disclose the problem to any future buyers. Those buyers will either want it fixed or a huge price discount.