Am I bound to closing regarding an undisclosed condition?

UPDATED: Sep 30, 2022

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Am I bound to closing regarding an undisclosed condition?

I signed purchase agreement with real estate property listed said it had a well and septic but condition

of them were unknown. Now just before we are ready to close real estate agent told me there is no

septic. Can they keep my deposit or can I renegotiate the price now knowing that it has no septic system at all?

Asked on June 13, 2017 under Real Estate Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

You are not bound to an agreement when such an important fact is  not as was disclosed. If the seller or the agent knew there was no septic but nonetheless claimed there was one, they committed fraud, and fraud provides a basis for escaping (voiding) a contract. And if they did not know, then both sides were mistaken  as to the nature of the property, and a mutual mistake as to an important or material fact likewise allows a contract to be voided or at least "reformed"--e.g. adjusted (by a court, if necessary, the parties cannot agree) to reflect the true state of affairs, which could include, a reduction in purchase price to the value of a like property without septic. In any event, you are not bound to  the contract as is given this material error.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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