If Seller Lies, Can Buyer Cancel a Purchase Contract Before Closing?

If Seller Lies, Can Buyer Cancel a Purchase Contract Before Closing?

  Question: Last month we signed a contract with $10,000 earnest money to purchase a home in Sedona. In the Seller’s Property Disclosure Statement (“SPDS”), the seller said that there had never been any termites, or any termite treatment. During the escrow we had a home inspection and a termite inspection. Neither inspection discovered any termites or any termite damage.

Two days before escrow was scheduled to close, however, we did a final walk-through. My wife looked in a kitchen drawer, and found a bill from a termite company to the seller for treatment of termites three years ago. Our real estate agent sent a copy of this bill to the seller who didn’t deny that the termite repairs were made, but just said it was too late to cancel the purchase contract.

Can we cancel the purchase contract now and get our $10,000 earnest money back, even after we had a “clean” home inspection and a “clean” termite inspection? Note: Our home inspector said that the home had been repainted recently which probably covered up any termite treatment.

  Answer: Yes. The seller fraudulently misrepresented in the SPDS that there had never been any termites or termite damage in the home. You should also be able to get reimbursement from the seller for your costs, such as the cost of the termite inspection and the home inspection.