Q: Contract dispute over house square footage that was misrepresented.
We signed a contract to purchase a house for a specific sale price. The property was presented to have 1844 square feet. I thought it felt smaller and when I asked the realtor said wait for the appraisal to see. After appraisal it was noted the sale price was within market range but the actual square footage was roughly 300 square feet less that was disclosed. Our realtor is saying we aren't allowed to back out of the contract now and are not able to renegotiate the price. Are we allowed to back out or ask the seller to renegotiate? If we do back out of the contract and choose to lose our earnest money, can they still sue us? The realtor threatened this as well. I feel our agreement was made on facts that were proven to not be accurate. We have not closed yet and still have a month and a half til closing.
A: Most house listings have a disclaimer stating that the information is not guaranteed to be accurate, and buyer should verify it. Most purchase contracts also state that any statements by agents are not to be relied on by buyer. Most purchase contacts also advise buyers to get whatever inspections they choose to confirm information about the house. If you breach the contract by refusing to close, the seller can sue you. The purchase of a home is a major financial decision, and it is advisable to have an attorney involved in the process, along with obtaining a comprehensive home inspection, a boundary survey, title examination, etc. Use the Find a Lawyer tab to retain a local real estate attorney to review the purchase contract and all the circumstances, and advise you of your options.
A:
For a more thorough answer an attorney would need to review your purchase agreement. A standard purchase agreement would have an appraisal contingency. However, the contingency is usually fulfilled if the property appraises for the amount of the purchase price. With the square footage being off, the price per square foot may be very different, but may not give you a way out of the contract based upon the appraisal contingency.
If you cancel the contract, then it may be considered a breach, and you may be liable for damages. You should consider whether breaching the contract is in your best interest. It may be that you will never be satisfied if you go through with the contract. This emotional damage will never be recovered. In the alternative, considering the uncertainty and your aversion to risk it may not be a big deal.
You should approach the Seller and state that you are not willing to close based upon the current circumstances. You will renegotiate the sales price. Otherwise, you believe that they breached the contract, and you will require the real estate agent to keep the funds in escrow.
If the Seller refuses to negotiate, you walk away and face litigation. Litigating the damages can be difficult for the seller. It is not simply a matter of putting the house back on the market and suing for the difference in price received.
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