Backing out of a land purchase before close
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Backing out of a land purchase before close
We were purchasing land. The day before close we discovered we were mislead in
the description of the land. We declined the close. We are being told that we are
responsible for all attorney fees and the survey of the land and we forfeit our
earnest monies. Is this correct?
Asked on July 13, 2018 under Real Estate Law, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
It depends upon in what way were you misled. A material, or important, misrepresentation about the property would be fraud and would provide a basis to void the contract, in which case you'd get your earnest money back and would not owe the seller anything. But a nonmaterial misrepresentation would not affect the validity of the contract.
Examples: say you were supposed to be buying 2 acres, but the land is really only an acre-and-a-half. A 25% reduction in what you were told you would be getting would almost certainly be fraud. It would also be fraud if it was represented that all of it could be built on or used, but in actually, a large portion is protected wetland.
On the other hand, say that it's 1.9 acres instead of 2 acres, or that it is actually slightly larger (say, 2.2 acres) than advertised; or that it is 2 acres, but the dimensions are different (instead of being 1 acre by 2 acres, it's maybe 1.8 acres by 1.1 acres); or there is some protected wetland, but it's only one small corner--in these cases, the difference between what was represented to you and what you would have gotten is not material or important and you could not void the contract. In this case, you'd lose your earnest money and be liable the seller's costs.
So it depends on what the misrepresentation was, and how serious it was--i.e. did not amount to fraud? Or was it some minor, understandable, and harmless mistake?
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