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$100,000 deposit lost when fax not read in time

By Robert Hof

The attached case raises interesting issues related to outstanding open work permits and how they might be handled on closing. In this case, the buyer purchased a renovated home, but learned that there was still an open permit that was not finally inspected and approved by the Building department.

The buyer refused to close until the permit was cleared. On the closing date, the seller lawyer notified the buyer lawyer by fax at 4 pm that they could obtain a title insurance policy to deal with the issue. The buyer lawyer did not see the fax and assumed the deal was cancelled.

See the attached decision where the judge ruled that the deposit was forfeited by the buyer because in accordance with the offer, if a seller can obtain title insurance to correct a work order issue, then a buyer must close.

When selling or buying properties that are recently renovated, questions need to be asked to make sure that any outstanding work permit has been finally inspected and signed off by the local City official. Open work permits can later lead to work orders, which will become the responsibility of the owner to repair later.

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