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legalgems
legalgems, Arbitrator
Category: Real Estate Law
Satisfied Customers: 7629
Experience:  Just Answer consultant at Self employed
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Of a home in New Mexico. I entered into escrow with Buyer.

Customer Question

I am Seller of a home in New Mexico. I entered into escrow with Buyer. Inspections were completed and the home inspection report noted no items requiring repair. The sellers requested a roof inspection and then requested $3000 for repair of a flat roof above the garage on the date repair requests were due plus a verbal request to move the closing day forward. Before we could respond we received a termination of contract and buyer is requesting Ernest money be returned to them due to inspection. As seller I feel I am entitled to earnest money as 1.) home did not fail inspection and 2.) we were not given opportunity to respond to their requests.
Submitted: 6 months ago.
Category: Real Estate Law
Expert:  legalgems replied 6 months ago.

Was there a roofing contingency?

Customer: replied 6 months ago.
According to the contract the buyer has a right to a roof inspection. Later on in the contract it states "if buyer has reasonable objections to any report or unsatisfactory condition disclosed by any document survey or ILR and/or inspection then no later than the applicable objection deadline buyer may request that seller cure buyers objections or buyer may terminate this agreement. Buyer's objections or termination must be in writing and include a copy of the inspection report on which buyer's objection or termination is based. Buyer's failure to deliver to seller his objection or termination by the objection deadline shall be deemed a waiver of both buyer's right to object and the applicable inspection contingency." After sending objections based on inspection within a few hours and before our response they sent a termination citing "mutual consent for the following reason: home condition as a result of inspections." No documentation was attached and I still have not seen roof inspection.
Expert:  legalgems replied 6 months ago.

In order to be entitled to the earnest deposit back the buyer would need to be in compliance with the terms of the contract- if the objection deadline has passed, then it is waived which means that the sale will go forward, as is (ie seller need to remedy the situation).

If the objections were noted prior to the deadline, then the seller has the choice to remedy the situation; buyer prevents this by not including the report; as such a buyer would not be entitled to a refund as they did not comply with the provisions of the contract. In order to preserve the right to retain the earnest money one would need to document that there was not mutual consent, and that seller is still waiting for the inspection report which needs to be delivered by X date (per the terms of the contract).

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Information provided is for educational purposes only. Consultation with a personal attorney is always recommended so your particular facts may be considered. Thank you and take care.

Customer: replied 6 months ago.
The Buyer's ORW the included their roofer's bid. In the ORW buyer cited the home inspection which list roof under "items needing attention". We were not given a chance to respond to the ORW termination was intiated and the termination did not include any documention.
Expert:  legalgems replied 6 months ago.

Based on the language,

if buyer has reasonable objections to any report or unsatisfactory condition disclosed by any document survey or ILR and/or inspection then no later than the applicable objection deadline buyer may request that seller cure buyers objections or buyer may terminate this agreement

it is at buyer's discretion to request a cure, or to terminate. So long as the objection is reasonable the buyer can then terminate if that is their chosen method; so one would need to determine if, based on local standards, the revealed defect is material. That presupposes that documentation (the report) was included prior to the objection deadline; if not, then per the language it is deemed waived and the sale would go forward or the buyer would forfeit the deposit.