Cancelling Real Estate Contracts Because of Mold

Comments 0 
| 2012 May 19 |
Cancelling Real Estate Contracts Because of Mold

When purchasing a home, the buyer and seller become locked into a contract that identifies the main people involved, the property and the terms of purchase. It’s typical that the buyer has the right to cancel the contract if the property can’t be financed. If you must cancel a real estate contract because of a mold contamination, you’ll need to get in touch with the broker or agent and the seller’s representative. You’ll also need to give the seller an opportunity to remediate or provide a remediation allowance.

Escaping a Contract After Uncovering Mold

To say it’s unsettling to find mold in a house you’ve signed on to purchase, is an understatement. Fortunately, there are ways you can move forward – there is a solution. The following are instructions, to help guide you through cancelling a real estate contract once you’ve discovered mold on the property:

    • Review the purchase offer and the purchase contract. In each document, there will be provisions under which the buyer and seller have the right to withdraw the offer or cancel the contract. These provisions are otherwise known as contingencies, and they’re set out to protect each party under the contract’s “right of rescission” clause. Most purchase offers include a buyer’s right to inspect a property for defects as well as a right of rescission if the inspection reveals any major defects such as mold, a leaky roof and other construction issues. If the purchase offer has already been accepted and mold was found following the home inspection, review the purchase contract. Just as with the purchase offer, the buyer usually reserves the right to cancel the contract in the case that such an issue arises.


  • Once a mold problem has been discovered, you should contact your real estate agent or broker immediately. Let them know of the discovery and ask them to contact the seller’s representative to negotiate a solution. You may request that your broker ask the seller’s representative to have the seller pay the costs of mold remediation services. You may also request that they put the closing on hold until there’s a resolution or provide you with allowance monies to cover the cost of remediation.


  • Provide the seller with the opportunity to address the issue. Usually, the buyer must give the seller a period of time in which to correct the mold issue before being able to cancel the purchase contract. In the U.S., each state’s laws regarding the time given will vary, but generally the seller will have about 30 days to both address and correct the issue; a professional mold remediation can take up to two weeks.


  • In the case that the seller does not agree to cover the costs of remediation or provide you the allowance, you can cancel the real estate contract. Have your broker (or agent) rescind come together with the the seller’s representative to cancel it. Furthermore, you may want to contact a local real estate attorney to let you know of your legal options.