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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 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.


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