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Richard
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 53972
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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Using a Tenn. Assn. of Realtors "Lot/Land Purchase and Sale

Customer Question

Using a Tenn. Assn. of Realtors "Lot/Land Purchase and Sale Agreement" for buying land (no improvements) located in Tenn., the agreement describes the land at 165 acres and the total purchase price at $381,000 with the purchase price to be determined by a new survey at $2,300 per acre. At time this agreement is signed, all parties thought the land contained 165 acres + or - a few acres and thought the total purchase price would be $381,00 + or - a few thousand dollars.
The survey was then made showing 207 acres (42 acres or 25% more land than expected). At $2,300 per acre, the purchase price becomes $476,000 ($95,000 or 25% more than expected).
Questions: Given the large variance in land area and in dollar amounts,
1. Does the agreement remain as a valid & binding agreement on Buyer and Seller?
2. Can Buyer terminate and be refunded its deposit?
3. Can Seller terminate and return deposit to Buyer?
Thanks for your help. I looked forward to your response ASAP.
Submitted: 11 months ago.
Category: Real Estate Law
Expert:  Richard replied 11 months ago.

Good morning. My name is ***** ***** I look forward to helping you.

In order for there to be a binding and enforceable contract, there must be a meeting of the minds. And, if the acreage amount is materially different than the contract, there really isn't a meeting of the minds. The language to which you refer is applicable to situations where there are minor differences in the actual acreage, But not a 25% differential. So, the buyer would clearly have the right to terminate and get the earnest money returned in full because the acreage is substantially different than what was represented, which is something the seller either knew or should have known. On whether or not the seller can terminate, that's not quite as black and white because the seller should have known the amount of the acreage more closely and if the buyer were to insist on closing for the higher amount and pursued a suit if the seller did not agree, the court may very well insist that the seller close because all this arose due to something the seller knew or should have known.

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