2023 Real Estate Closing Attorney – Problems and When Not to Close

An experienced real estate closing attorney at Whitney, LLP can provide legal advice regarding when a Buyer is justified in not going to closing. We have experience representing Maryland homebuyers who discover problems and no longer want to proceed to closing.

Even after serious problems are discovered, Buyers are often given excuses and pressured by both their own real estate agent and broker, as well as the seller’s agent and broker, to “close now” and deal with the issues later.

However, Buyer’s have legal rights and can enforce their contractual rights which may allow them to not go to closing and recover their earnest money deposit.

If you need a real estate closing attorney to fight for your rights in Maryland, contact Whitney, LLP. We represent homebuyers and property buyers across Maryland.

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Problems Discovered After Signing

After the Contract is signed by both parties, the Buyer may learn important information about the Property that was not disclosed.  The Seller’s failure to disclose material facts about the condition of the Property may provide a legal basis to declare the Contract void and of no legal effect.

Other times, the Seller may not comply with the terms and conditions of the Contract.  This may constitute a default and provide for unilateral termination of the Contract and return of the Deposit.

False or Incomplete Information Supplied by Seller

Maryland law requires a Seller of residential real estate to provide a Property Disclosure Statement or Property Disclaimer Statement. Prior to making an offer, the Buyer must be provided with a copy of the Statement to consider in deciding whether to make an offer in reliance on the information set forth in the Disclosure or Disclaimer Statement.

Disclosure Statement

When a Seller elects to provide a Disclosure Statement, the Seller attests to having personal knowledge about the condition of the Property and must answer 19 separate questions concerning the Property including any history of water infiltration, condition of plumbing, structural defects, termite infestation and termite damage, and many other important aspects of the Property.

If improvements were made to the Property, Seller must disclose whether the required permits were pulled. The Seller must respond to each question with a “Yes,” “No,” “Unknown” or “Inapplicable.”

False Disclosure Statement

One example of a false disclosure is a Statement that denies knowledge of prior termite infestation or termite damage. The Buyer may come to find out through a Wood Destroying Insect (“WDI”) Inspection that there is visible evidence of termite damage or evidence of past treatment.

In some instances, the Seller fails to determine the scope of hidden damage and fails to have a licensed contractor to perform repairs. Other times, inadequate repairs are made and concealed behind newly installed and painted drywall.

Other examples include falsely denying a history of basement flooding, mold or falsely representing that the Property has public sewer when in fact it has a failed septic system.

False Disclaimer Statement

A Seller may falsely deny actual knowledge of a latent defect, which is defined as a condition which creates a risk to safety or health if the defect is not visible upon reasonable inspection. 

For example, the Seller may be aware of hidden structural damage due to termite infestation, or a failed septic system or abandoned underground oil tank.

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Contract Terms and Conditions

The Contract of Sale typically provides that “time is of the essence,” and that failure of the Seller to comply with terms or conditions is grounds to terminate the Contract upon written notice.

A Seller may agree to a WDI Inspection, but when evidence of termites is found, may refuse to provide access for a qualified structural professional to evaluate the scope of damage and need for repair. Such an evaluation requires opening walls, ceilings and flooring or siding, as needed to determine the extent of damage.  Such a refusal constitutes a breach of contract and grounds for termination.

Return of Deposit

The typical Contract provides for return of the deposit if the Seller breaches the Contract. For the escrow agent to return the deposit, both parties must sign a Release Agreement directing the escrow agent to refund the deposit.

Whitney, LLP’s experienced real estate closing attorneys have experience recovering Buyers’ deposits after Buyers decide to exercise their contractual to cancel the Contract and not proceed with closing.

“AS-IS” Addendum

A Contract may provide for the Property to be sold “AS-IS” without the right of the Buyer to terminate based on the results of a home inspection by a licensed home inspector, or a WDI Inspection by a licensed pest control contractor or any other number of inspections (e.g., mold, radon, septic).  Even in a very competitive market, it is very ill advised for a Buyer to agree to such a contract provision.

Instead, Buyer should bargain for an “AS-IS” provision that provides for the absolute right to terminate the Contract, upon written notice, if the Buyer is dissatisfied with the results of any inspection.

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Bad Advice and Pressure from Real Estate Agent

Unfortunately, some Buyers are incorrectly told by their agent, despite owing a fiduciary duty of utmost loyalty, that they must go to closing once the Contract is signed, regardless of the Seller’s false information or Seller’s failure to comply with the Contract.  In this regard, the agent may not be acting in the Buyer’s best interests and/or may be providing legal advice which is improper and incorrect.

While Buyers can file a complaint against their real estate agent, that does not help the Buyer deciding whether to proceed to closing, or not.

Whitney, LLP’s real estate closing attorneys have experience guiding clients who are being misled by real estate agents and brokers who do not understand the contractual obligations of both parties.

daniel whitney jr daniel whitney sr  - 2023 Real Estate Closing Attorney - Problems and When Not to Close
Daniel W. Whitney, Jr. and Daniel W. Whitney, Sr. of Whitney, LLP

Whitney, LLP – Real Estate Closing Attorney Advice

Once a Contract is signed, Buyers may feel pressured to go to closing. However, there may exist sound reasons to terminate the Contract. An experienced real estate closing attorney can provide advice on whether the Contract can be terminated and thereby avoid a financial disaster by closing on a Property requiring major repairs.

If you have discovered problems with a property prior to closing, call Whitney, LLP’s real estate attorneys.

Call us at 410 583 8000, or use our Quick Contact Form, to discuss your potential case.

We represent clients across Maryland. 


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