Realtor® Legal Tip – Can the seller cancel the REPC if the appraisal comes in low?
June 14, 2019
Author: Curtis Bullock
Section 8.2 of the REPC, if checked in the affirmative, allows the Buyer to cancel the REPC in the event the appraisal comes in low. There is no right of a seller to cancel built into that section (unless separate language allowing for this is added to the contract on an addendum).
If the seller says they want to cancel because of a low appraisal they run the risk of being in default on the REPC. Section 16.2 of the REPC would be triggered and the buyer would be able to select 1 of the 3 remedies stated in that section. As with any default, to enforce the contract it may involve mediation, hiring an attorney, or mutually agreeing to resolve and settle the matter.
If an appraisal comes in low the buyer will often try to negotiate with the seller on adjusting the purchase price but the seller is not obligated to come down. If that happens, the buyer may cancel pursuant to section 8.2(a) of the REPC.
When in doubt, read the REPC for the answer. I’m seeing more and more cases where courts simply enforce the plain language meaning of the REPC.