Q: How can I terminate a property purchase agreement due to undisclosed defects and cooperative debt?

A: Generally, you'll need language in the contract in order to rescind it. Sometimes a statute or case will provide a way out.

Jack

A: This situation sounds overwhelming, especially after learning about costly defects and financial issues that weren’t disclosed upfront. In New York, you may have the right to terminate the purchase agreement if there was material misrepresentation or failure to disclose key facts—particularly if those issues affect the value, safety, or financial health of the property. Cooperative apartments can be especially tricky, since buyers often rely on information from the seller and management company about the building's financial condition.

If your contract includes an inspection contingency or allows cancellation based on financial disclosures, that could give you strong legal footing to walk away without penalty. The discovery of health hazards and substantial debt—especially if these were hidden or minimized—could be considered grounds for rescission. Start by sending a formal written notice to the seller, stating your intent to terminate the contract based on newly discovered material defects and undisclosed financial liabilities.

Keep documentation of your inspection report, correspondence, and any records showing what was or wasn’t disclosed. You may also file a complaint with the New York Department of State if a licensed real estate professional withheld information or misled you. You acted in good faith, and no one should be pressured into a risky purchase due to lack of transparency.