Contracts
A Minnesota purchase agreement requires the seller to pay for a pre-listing inspection report. After the report reveals significant defects, the seller wants to cancel the listing. Under the terms of the purchase agreement, the seller:
ACan cancel at any time since they own the property
BMay face liability for backing out after a binding contract exists✓ Correct
CMust renegotiate with the listing broker
DAutomatically loses the earnest money
Explanation
Once a purchase agreement is fully executed, it is binding on both parties. If the seller attempts to cancel because of unfavorable inspection results (unless there is a specific cancellation provision), they may face legal consequences including the buyer seeking specific performance or damages. Sellers should consult legal counsel before attempting to cancel a binding purchase agreement.
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