Home Buying in Scottsdale>Question Details

Mom, Home Buyer in Tempe, AZ

can buyer walk after contract is signed before close of escrow? After inspection period

Asked by Mom, Tempe, AZ Thu Aug 11, 2011

my son is in the process of buying an older home. Inspection period is done and seller is doing some repairs. Just found out sewer line is going to need to be replaced. Can he get out of contract. COE is coming up?

Help the community by answering this question:


Why did he just now 'discover' the sewer line is in need of repair or replacement?? In other words, why did he not find that out during the Inspection Period?? As others have said, the contract will prevail. Your son should be consulting first with his Buyer's Agent/Realtor, and you should not be giving him advice based on info received via a public forum like this. If your son's Buyer's Agent cannot answer his questions/concerns, then he should consult with a real estate attorney - ASAP.
1 vote Thank Flag Link Thu Aug 11, 2011

Everyone can get out, the question is at what cost. The contract is really the controlling element, what have the parties signed, what does it say, what conditions etc.

Would your son want the house if the sewer was repaired? If so, negotiate the repair between the two.

Arizona Homes for Sale by a Guy from Iowa
Web Reference: http://www.McVinua.com
1 vote Thank Flag Link Thu Aug 11, 2011
Its a material matter but there would be no responsible way to assure you without review of the contract. Seek the broker advise and tell them what you want to do they should advise you properly or seek legal counsel as there is a cancellation clause in the contract you'll just have to know what it will cost you (ie earnest money or more).
Good luck
Laura Myers
AZ Real Estate Consultants
Keller Williams AZ Realty
1 vote Thank Flag Link Thu Aug 11, 2011
If there is financing (particularly FHA or RD) involved and a contingency in the contract the lender will mandate it to be fixed if seller won't your son should be unable to secure financing which will allow him to get out of the contract.
Hope that helps
0 votes Thank Flag Link Mon Jan 16, 2012
THis is a material defect in the property.
Was the Seller aware of it?
Was it discovered by the Buyer or the Seller?
Was it something the Seller should have been aware of?

You made your offer with the expectation of having a functional sewer line.
This is not a minor expense.

Get legal advice from a local Real Estate Attorney.
Put a stop to this before it is too late.
0 votes Thank Flag Link Sat Jan 14, 2012
I'm a Mother and understand your concerns!! I would consult with not only your agent but an attorney. I cannot comment on the contract as I haven't seen it but typically there is a period of which you have options to get out. Again...without seeing it I wouldn't be able to give you an educated opinion. I would jump on getting someone to look at it so you're not loosing time!

Worst case you'd lose the earnest money. All states are different in how they work their contracts.

Is there a financing contingency? Is there a due diligence period or inspection period within the contract?

I wish you and your son the very best!!
0 votes Thank Flag Link Fri Jan 13, 2012
Without reading the contract I would be guessing and that is not what you want to do. I would consult an attorney and get specific advise . A mother's instincts are always right on, but be sure that your further actions will not create a more costly mistake by withdrawing from a contract where the facts may be stacked against you.
A signed contract is binding to both parties.
Good Luck Mom
0 votes Thank Flag Link Sat Jan 7, 2012
It depends. Without a little more info (and seeing the contract) it's hard to say.

The worst case scenario would be your son losing his earnest money and the seller suing him for 'specific performance'. Usually things don't get to that point, however. There may be some way to work with the seller on this, or find another way to release him from the contract intact. If you're financing the purchase and the lender requires the sewer line replacing as a condition of the loan, then unless it's replaced, the loan will be declined, which would (usually) invoke your son's financing contingency.

Have you looked into the cost of replacing the sewer line and decided it's definitely not worth it? Older homes almost always need ongoing issues addressed; if it needs doing in order for the home to be habitable, that's a very different situation from it becoming an issue further down the line.

Your agent should be able to help you with a lot of this, and if you feel you need more support you can also involve his or her Broker. A real estate attorney is another option, and if you determine you want to breach the contract, you would be well-advised to contact one to minimize your risks.

Good luck.

Emma Beyer
RE/MAX Casa Grande Yost Realty
Web Reference: http://www.yosthomes.com
0 votes Thank Flag Link Tue Aug 23, 2011
Depends on what is disclosed and if the property is in similar condition to when offer was accepted. Best to talk to a real estate attorney, a review of the contract and a little time should be all it takes to determine your legal rights.
0 votes Thank Flag Link Wed Aug 17, 2011
If your son is obtaining a loan, this may be a lender required repair and if not done the lender would not be able to fulfill the loan contingency. Therefore, your son could get out of the contract and receive the earnest deposit back. Your sons agent should be advising your son on this matter. I would at this point be sure that the sellers agent and your sons lender are informed of this needed repair and see if he can negotiate the repair. Typically, this should have been discovered within the inspection period. Good luck.
0 votes Thank Flag Link Thu Aug 11, 2011
Depends so much on circumstances. In some scenarios you might have to leave the escrow money with the seller. So much depends on negotiating with the seller. The property should be safe, sound and sanitary. The seller may agree to a lower price or pay for the sewer line. You never know until you ask.
Web Reference: http://starteamaz.com
0 votes Thank Flag Link Thu Aug 11, 2011
I am from CA. In CA, based on exactly what you say here, the buyer may have so many possibilities to walk away with the deposit. That is what I learn from school, not my advice.

To get a useful advice, you need to provide more details. Also in CA, real estate sales can help you to go through the paperwork and explain it for you but that does not mean they can advice you all the issues on your contract. That is lawyer's job. But I know many real estate sales treat it as their job.

0 votes Thank Flag Link Thu Aug 11, 2011
Probably cannot get out of the contract, but can refuse to close escrow.

Title company won't release his earnest money to the Seller w/o your son's authorization.

At this point, several scenario's could take place.

Good Luck,

Neil Brooks
0 votes Thank Flag Link Thu Aug 11, 2011
Don't you really want to know if the cost of that repair can be pushed on the seller? Why would you not buy a house just because a typical replacement item needs replacing? I know that a lot of parents think their children are making a bad move with a home purchase and they often have the very best intentions but not always all of the information. I always try to get the parent involved so I can answer their concerns and edcuate them as to the contract terms and the market\. I would suggest you try talking to his agent to see what options exist under the agreement. If the house is really not worth the price with a bad sewer line, it may not appraise and that might be a permitted "out", for example. Best of luck to you.
0 votes Thank Flag Link Thu Aug 11, 2011
If the seller has not disclosed this upfront he definitely should be able to cancel or get a credit for the repair. Talk to your attorney
0 votes Thank Flag Link Thu Aug 11, 2011
The buyer can but they will lose the earnest money-maybe more depending the
circumstances-but usually just the earnest
0 votes Thank Flag Link Thu Aug 11, 2011
There are several contingency's that the buyer still has to cancel the contract, however, after the inspection period it is difficult.

Here are some contingency's to consider: Preliminary Title Report, HOA Documents, Insurance CLUE Report, SPDS Seller Property Disclosure Statement, (All These are supposed to be submitted to buyer within 5 days of contract, however, listing agent never seems to get this to buyer in the correct time frame). If there is anything adverse on any of these documents the buyer has 5 days to notify seller that he disapproves and can cancel contract with return of earnest money. Very important to know that the buyer has 5 days to review these documents from the time they receive them, anytime during escrow. This is why the seller should have these to buyer ASAP.

Additionally, the final contingency is the loan if not cash. The transaction can be canceled if the buyer does not qualify for the loan that was listed on the Pre-Qual form. If they are denied a loan that is not on the Pre-Qual (This happens a lot because buyers agents are not aware that if they change loan terms they have 5 day to notify seller) then the buyers earnest money is forfeited.
0 votes Thank Flag Link Thu Aug 11, 2011
There is not enough information to be able to answer your question. We would need to see how your son's contract was written and know more facts. You should have him discuss the situation with his Realtor and if he wants to proceed see what remedies could be made. There are ways to cancel a contract but no one here could know if it is possible without more information.


Ron & Brenda Cunningham
**Recognized in the Phoenix Business Journal as "One of the Top 50 Realtors in the Valley"
0 votes Thank Flag Link Thu Aug 11, 2011
If you are using A Realtor you should discuss this with him/her...try to negoitate the sewer repair.. contracts can be broken but there is always a price to pay..if in doubt contact a real estate attorney. might be better to walk away now that if major repairs will be needed later. It is hard to say without knowing all the circumstances.
0 votes Thank Flag Link Thu Aug 11, 2011
In a normal contract there is nothing verbage wise that would prohibit a buyer from cancelling at anytime. The questions really is how much money or cost will the buyer potentially lose for cancelling at this point in the transaction. Has the appraisal been done? Is there a final loan approval?.......depending on what stage other components of the transaction your in... there may be another out and a way to save the earnest money....... have your agent review the file possibly with his broker if need be to see if there is a legitimate way out without losing earnest money etc....
0 votes Thank Flag Link Thu Aug 11, 2011
There are many circumstances under which the answer can be 'yes', but
we would need a lot more info from you.
Call if you wish to discuss further.
0 votes Thank Flag Link Thu Aug 11, 2011
There is no pat answer for this problem. Did the sewer damage occur after the inspection then you would have some claim but if not, why wasn't it discovered by your inspector. You may be able to fight to get your earnest money back but it will be the title company's determination as towho gets the earnest money. Also the seller may be able to sue you for specific performance if they don't accept the earnest money. Your best approach should be getting with your realtor and seeing if there is some way to come up with an amicable solution for both sides.
0 votes Thank Flag Link Thu Aug 11, 2011
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