The Conditional Termination That Came Too Late
On January 5 the parties sign an FR/BAR 'AS-IS' Residential Contract for Sale and Purchase on a house priced at $350,000, with a $7,000 escrow deposit held by Anchor Title. The inspection period is the form's 15 days, ending January 20 at 5:00 p.m. On January 15 the buyer's inspector finds a 14-year-old roof with an active leak and a water-stained ceiling. On January 19 at 4:40 p.m. the buyer's agent emails the listing agent: 'Buyer demands seller replace the roof and reduce the price to $335,000; if seller won't agree, buyer will terminate.' On January 21 the seller counters with a $1,500 patch. The buyer replies that the deal is off and demands the deposit. The seller refuses to release it.
1. Was the January 19 email an effective exercise of the inspection-period termination right? Explain the risk to the buyer.
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The AS-IS form gives the buyer a no-stated-reason right to cancel during the inspection period, but the right must be exercised unambiguously, in writing, before the deadline.
The January 19 email is conditional: it demands a new roof and a $20,000 reduction and only terminates 'if seller won't agree.' That reads as a proposal to amend (a counteroffer), not an exercise of the cancellation right. Under the as-is structure the buyer takes the property in its present condition unless both parties sign an amendment; a repair demand does not obligate the seller to do anything and does not extend the inspection period.
By the seller's January 21 response, the January 20 5:00 p.m. deadline had passed. The buyer's exposure: he is now bound to purchase as-is, and refusing to close may be a breach, letting the seller claim the deposit as liquidated damages after any notice-and-cure period. The safe course was an unconditional written termination delivered January 19, or a signed amendment before the deadline with the termination notice held in reserve. Confirm the exact version of the FR/BAR form used, since deadlines and notice mechanics are form-specific.
2. The parties are fighting over the $7,000. What may Anchor Title do, and what may it not do?
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The escrow agent is a stakeholder, not a judge. It cannot release the money on either party's say-so, and it is not liable for continuing to hold in good faith.
Proper handling:
- Hold the funds until both parties sign a written release directing disbursement;
- Or until the contract's mediation/arbitration process produces a determination;
- Or until a court orders disbursement, or the escrow agent interpleads the funds and lets a court decide.
The deposit should not be released to the seller merely because the buyer's notice was defective, nor to the buyer merely because he demanded it. The timeline plus the contract language decides who is right; the release/mediation process exists to resolve that dispute. Staff should never tell either party the money 'is theirs.'
3. What should the buyer's agent have done differently, and does 'AS-IS' relieve the seller of disclosure duties?
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'As-is' is not a license to conceal. Florida's common-law duty (Johnson v. Davis) requires a seller to disclose known facts materially affecting value that are not readily observable, and the seller's licensee must disclose known material facts as well. A seller who knows about an active roof leak must disclose it even in an as-is sale; the buyer's inspector finding it later does not cure an earlier misrepresentation.
Agent practice points:
- If the client wants out, send a clean, unconditional written termination before the deadline; treat any repair request as a separate, non-binding proposal.
- If the client wants the house, use the report to negotiate an amendment signed by both parties before the deadline expires.
- Document delivery and receipt of every notice; deadline disputes turn on timestamps.
- Explain to the buyer in writing that as-is shifts condition risk to him, but does not shift fraud or concealment risk to him.