Legal Question in Real Estate Law in Rhode Island

My husband and I recently entered a purchase and sales agreement on our first house. The contract was subject to a satisfactory home inspection. Our inspection revealed many problems that were not disclosed to us although we find it hard to believe that the seller did not have prior knowledge. There was termite damage, a rusted and recalled electrical box, and also a pretty major leak from one the bathrooms. Our inspector could not determine where the leak was coming from and we probably could not find out without ripping out some of the shower walls. The was also quite a bit of mold in the insulation in the basement as a result of the leak. We decided to walk away. We notified the seller in writing three weeks ago. We have not received a written response in return. We found another house in the mean time and would like to go ahead with the sale. The original seller had an attorney call us today (three weeks later) to inform us that she refuses to release us from the contract on her home unless we forfeit our deposit. Isn't this extortion? Our contract clearly stated we needed a satisfactory home inspection. She claims she has had a plumber, electrician, and exterminator in the house and they all claim that the problems our minor but she has failed to show us any of their findings in writing. Can she really hold us under contract for as long as she would like unless we pay up? I know we had seven days to respond after the inspection so why would she have an open ended amount of time. Could someone please tell me my rights? I don't want to miss out on this other house or lose out on the first time buyers credit. Thank you


Asked on 1/29/10, 8:29 pm

1 Answer from Attorneys
Jules D'Alessandro D'Alessandro & Wright

It does sound like extortion (but not quite) and this is becoming an increasingly frequent problem. The seller is so desperate to dump this house that she is willing to take her chances with a lawsuit. Depending on the amount of the deposit, it can easily cost more to get the deposit back than the deposit itself. For example a $1,000.00 deposit could easily cost $1,500.00 to $2,500.00 through a lawyer. However if the deposit is less than $2,500.00 you could pursue the amount if small claims court without a lawyer. A bigger potential problem however is if the seller sues your for �specific performance�. In that case she would go to court and try to get a judge to enter an order forcing you to go through with the purchase. If you are unable to do so she could then sell the house at the next best offer and sue you for the difference in your purchase offer price and the amount the house actually sells for. Cases such as this should be handled aggressively by an attorney who is familiar with real estate transactions, equitable relief and litigation. At a minimum you need to sit with a lawyer to review the P&S and determine your options. We handle these matters and you can feel free to contact me.

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Answered on 2/04/10, 6:28 am


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