The parties signed a contract for the sale of real estate. The contract stipulated a due diligence procedure before closing. The contract also included a provision for automatic termination if encumbrances were detected that the seller could not remove.
When such encumbrances were
revealed, the seller agreed to terminate the contract and return the deposit.
However, the buyer disagreed and demanded that the encumbrances be removed and
the transaction proceed to closing. The court ruled in
favor of the seller.
SOURCEThe relevant clause read as follows:
TITLE: …If… any valid objection to title… is made in writing to Seller and which Seller is unable or unwilling to remove, remedy or satisfy… and which Buyer will not waive, this Agreement… shall be at an end and all monies paid shall be returned without interest or deduction and Seller… shall not be liable for any costs or damages.
