URGENT, possible loophole to save my earnest money
I placed an offer on a bank owned foreclosure that was accepted 9 days ago and am currently under a fully executed contract. We discovered a leak in the roof that will significantly increase rehab cost, making my HM Loan monthly payment too high to proceed.
I found wording in the contract that may allow me to walk away from the deal while keeping my 25k earnest money, but my attorney isn’t confident.
The inspection contingency states the “purchaser may inspect OR secure an inspection report of the property 5 days from the seller acceptance date”. Then the purchaser has 10 days from the acceptance date or 3 days from receiving an inspection report (whichever happens sooner) to provide written notice of disapproved items, after which, seller may request a copy of inspection reports supporting the claim of disapproved items . Then seller can decide to repair, reduce purchase price, or terminate agreement.
My question is, if I have my lawyer submit a written notice tomorrow (on the 10 day deadline) claiming that I as the purchase inspected the property within the 5 day requirement from the acceptance date, can I then use an official inspection report that was provided on the 10th day as my supporting evidence, even though the “official” inspection took place after the 5 day deadline?
I’m otherwise at risk of losing 25k earnest deposit
You have already talked to a lawyer who has looked at all the documents. Nobody here can give you a better legal opinion. My business opinion is, "What have you got to lose?". Submitting the written notice costs you a pittance and might save you $25K. Doing nothing certainly will cost you $25K. If you cannot get the seller to repair the item, then you need to decide if you want to proceed.
You also should go back and look at how you are managing your business. I've never bought a property that didn't have something unexpected upon inspection. Either your underwriting is too aggressive or you need to get your inspections done in a timely fashion to comply with contractual obligations.
Good luck
Who's to say YOU didn't find the leak in the roof within the 5 day window, brought in the inspector to confirm your suspicions, and now are submitting within the proper window? Unless your contractor says an official inspector has to do it within 5 days, I think you're off the hook here. In the states where I own RE (Tennessee & Florida), anyone can be the inspector for purposes of the inspection contingency - the buyer, their mother, the mailman, it makes no difference.
I agree with @Greg Scott - you have nothing to lose by submitting in writing. Your lawyer sounds weak and cowardly.
Submit the request to cancel NOW dated before 5 PM today and state you noticed stains on ceiling or missing roof material on day five. You may not have to provide inspection. Ask servicer/lender to replace the roof or cancel.
Servicers have several inspections themselves before going to market.
Do it quickly without hesitation.
Thank you Greg, JD, and Caroline, your words have given me hope!
I’ll be submitting the written notice, with or without the help of my attorney, to the seller’s attorney with pictures of the roof and ceiling damage that I did in fact take within the 5 day window and can prove so if this goes to court. Furthermore, after rereading the contract further I’ve realised the offer date and seller acceptance date IN the contract is dated 6 days ago, not 9 days ago as I previously mentioned, which was when the original offer was accepted. This means my window to provide written notice and secure inspection is more defensible.
I will not be going down without a fight!