Is there a similar law protecting purchasers of existing homes if there is a “defect”?
Unfortunately, there is no statute which requires escrowing funds if there is a “defect” in the property which is discovered after the Agreement of Sale is signed but has not been cured by time of settlement. However, that does not completely answer the question. If the defect is “material”, i.e., it makes the property uninhabitable or deprives the purchaser the “benefit of his bargain”, the purchaser can delay settlement or even rescind the deal (unless there are limitations in the Agreement of Sale). These remedies may be undesirable for any number of factors, e.g., it is difficult to tell a purchaser not to settle when someone else is waiting to buy his or her prior residence or when all the purchaser’s household goods are already in a moving van. Most important, however, is the real intent of the parties — the purchaser wants to buy and the seller wants to sell and they want to do it when planned. Rarely is it beneficial to cancel or postpone settlement unless the defect is a thre
