The REPC on Trial!
April 25, 2017
Author: Curtis Bullock
Last week I was asked to testify as a trial witness in District Court in a real estate case involving the REPC. Defense Counsel’s purpose in having me testify at trial was to help explain to the court the meaning and rationale behind section 7 of the REPC. More specifically section 7(e) that requires the seller to provide a copy of lease agreements to the buyer as part of the seller disclosures.
Here are the facts of the case – The Buyer and Seller go under contract on the purchase and sale of a duplex. Buyer is an investor who is interested in owning a rental property. The Seller Disclosure Deadline was July 7, the Due Diligence Deadline was July 15 and Settlement was July 31. Seller provides buyer with a copy of the Seller Property Condition Disclosure Form before the deadline but does not provide the 2 tenant leases for the duplex until July 24th (well after the contract deadlines). Buyer is uncomfortable with the leases, cash flow and other issues and decides to cancel on July 28th. Seller files a lawsuit against the Buyer for monetary damages as a result of Buyer’s failure to close. The Buyer argues that the Seller breached the contract by failing to provide the lease agreements in accordance with Section 7(e) of the REPC. The Seller argues the Buyer cancelled too late in the transaction.
Court Ruling – Buyer wins. The failure of Seller to provide the lease agreements in accordance with section 7(e) (among other reasons) was enough to allow Buyer to cancel the contract even late in the transaction.
Takeaway – Deadlines matter! Make sure your seller’s provide all the disclosures noted in section 7 of the REPC prior to the Seller Disclosure Deadline (i.e., SPCD form, Title Commitment, leases, CC&R’s etc).
*This legal update is not intended to represent legal advice as it relates to any set of facts. If you have a legal question about a specific case, consult your attorney.