Q:
The seller has accepted my offer but the resulting contract requires that certain things (loan approval,
inspections) be done by a certain date. What happens if they are not completed by this date?
A:
Generally, these “conditions” and “contingencies” must be performed by the dates specified in the contract or
very soon thereafter, depending upon whether the contract states that “time is of the essence.” If time is of the
essence, and you or the seller fail to perform by the stated deadline, the other party may terminate the contract. If
the contract does not state that “time is of the essence” and, through no fault of your own, you are unable to
complete the inspections by the deadline, but do so within a reasonable time, the seller must still go forward with
the transaction. Although the seller may be able to recover damages from you for your failure to perform by the
stated date, the seller must still perform his or her obligations under the contract.
Q:
Once I have entered into a contract with the seller, is there any way I can cancel it?
A:
The standard form contract allows the buyer a “due diligence period” in order to perform inspections and
obtain a loan. As a buyer, you have the right to terminate for any or no reason prior to the expiration of the due
diligence period. After the expiration of the due diligence period, your right to terminate is limited to any special
provision provided in the contract.
For more information about due diligence, refer to the Commission’s brochure,
“Questions and Answers of Due Diligence for Residential Buyers” available at www.ncrec.gov. The law grants a
special rescission right in the following limited circumstances:
•
Residential Property Disclosure Act.
At or before the time you make your offer in a residential transaction,
the seller (whether or not a real estate broker is involved) must provide you with three written disclosures: (1)
Residential Property and Owners’ Association Disclosure Statement, and (2) Mineral and Oil and Gas Rights
Mandatory Disclosure Statement. If the seller does not, any resulting contract is subject to a limited right of
rescission — usually up to three calendar days from the time the contract is formed. You should be aware,
however, that there are a number of exceptions to this requirement. Consequently, for application of this law to a
particular situation, you should consult your attorney.
•
Lead Paint Disclosure.
If you are purchasing a residential building constructed before 1978, federal law
requires sellers and their brokers to provide you written information about the possible presence of lead paint and
the associated hazards. If you are not given this information (and an inspection period) before entering into the
purchase contract and have not signed a written waiver of your rights, you have a ten day inspection period during
which you may be able to cancel the contract.
•
Condominiums.
If you are purchasing a new condominium from a person classified by law as a
developer
,
you have seven days to rescind your purchase contract. When the seven day period begins or ends can vary from
one transaction to another, but it usually begins when you are given the required
public offering statement
. During
this period, all monies paid by you must be held in escrow by the developer. Immediately contact an attorney for
advice if you have questions about your rescission rights. (For more information on condominiums, see the
Commission’s brochure, “Questions and Answers on: Condominiums and Townhouses.”)
•
Timeshares.
If you are purchasing a new timeshare in North Carolina from a seller classified by law as a