Can a Seller Back Out After a Home Inspection in Pennsylvania?

Once a Pennsylvania agreement of sale is signed, the seller is generally bound by it, and under the inspection contingency described in Pennsylvania Association of Realtors (PAR) articles, the decision to proceed after the inspection belongs to the buyer. Pennsylvania's Superior Court has said that courts in the Commonwealth "must enforce specifically realty agreements breached by sellers." Under that process, the seller's part after the inspection is to answer the buyer's repair request: agree, negotiate, or say no.

In Oliver v. Ball, 2016 PA Super 45, an appeal from Butler County over about 71.5 acres in Cranberry Township that the sellers did not convey, the Superior Court reversed a trial court that had denied the buyer specific performance, holding that "the remedy of specific performance in realty contracts derives from the proposition that all land is unique." Specific performance is a court order compelling a party to carry out the contract itself, which in a land sale means conveying the property. Oliver adds: "An award of damages will not suffice to allow a plaintiff to acquire the same parcel of land anywhere else". This post covers the inspection contingency, repair requests, a seller who refuses to close, and Pennsylvania's Real Estate Seller Disclosure Law.

Can a Pennsylvania Seller Cancel the Sale After the Buyer's Inspection?

An inspection contingency is the clause in an agreement of sale that gives the buyer time to inspect the home and then decide whether to move ahead, ask for corrections, or end the agreement.

PAR publishes the Standard Agreement for the Sale of Real Estate, known as Form ASR. An October 2019 PAR article places the inspection contingency in paragraph 13 and says the contingency period is the number of days written into paragraph 13(A), or 10 days if that blank is left empty. By the end of that period, the article says, the buyer must "decide whether and how to proceed with the purchase of the property."

The options the article lays out belong to the buyer: accept the property, send a written corrective proposal, or terminate. Whether a particular agreement gives the seller any other way out depends on its wording.

PAR's articles on these points date from 2015 to 2024, and the edition in your transaction may read differently. Check the paragraph numbers and deadlines in your own agreement with your agent or a Pennsylvania real estate attorney. For the buyer's side of the clause, see these home inspection contingency rules in Pennsylvania real estate.

What Can a Seller Do With a Buyer's Repair Request?

PAR's articles call the buyer's written repair request a corrective proposal. The 2019 article says the parties then negotiate "for the number of days provided (5 if not specified)." During that window, "The buyer cannot withdraw or amend their proposal." If no written agreement comes out of it, "the buyer then has a choice to accept the property or to terminate the agreement."

A February 2015 PAR article, quoting the agreement language in use at the time, sets out the seller's side. The seller "will either agree to satisfy all terms of Buyer's proposal" or "negotiate, by written or verbal communication, another mutually-acceptable written agreement." The article also notes that "a seller may fail to respond to a buyer's corrective proposal," and states: "The language in the ASR doesn't create a good-faith obligation of seller to negotiate repairs."

Under the process the 2019 article describes, refusing repairs is not backing out: a refusal or a silent seller leaves the next decision with the buyer. For more on these talks, read about how sellers respond to inspection repair requests and whether buyers can ask for a price reduction after inspection.

What Happens If a Seller Refuses to Close?

The buyer may be able to ask a court to order the sale. In Oliver v. Ball, the Superior Court found that "a valid and binding contract for the sale of the Property existed between the parties, which Balls breached." Citing a 1963 Pennsylvania decision, the court said a buyer under a signed agreement "may go into a court of equity seeking to enforce the contract and to compel specific performance."

The remedy is not automatic. The same opinion repeats that "A decree of specific performance is not a matter of right, but of grace," and that it "will be granted only if a plaintiff clearly is entitled to such relief," where "there is no adequate remedy at law, and the trial court believes that justice requires such a decree." Its order read: "Judgment reversed. Case remanded for proceedings consistent with this opinion."

A buyer facing a seller who will not close should take the agreement to a Pennsylvania real estate attorney. The result depends on the contract's terms and the facts.

What Does the Seller Disclosure Law Require Before Signing?

Pennsylvania's Real Estate Seller Disclosure Law, 68 Pa.C.S. Chapter 73, covers transfers of property with one to four residential units, including sales, installment sales contracts, leases with an option to purchase, and condominium or cooperative units (Sections 7103(a) and 7302(a)).

Section 7303 requires a seller to disclose known material defects on a property disclosure statement and to deliver a signed and dated copy to the buyer before the agreement of sale is signed. The State Real Estate Commission writes the form, and Section 7304 lists 16 subjects it must cover, including the roof, basements and crawl spaces, structural problems, and hazardous substances.

Section 7102 defines a material defect as a problem with the property, or any part of it, that would have a significant adverse impact on its value or that involves an unreasonable risk to people on the property. A structural element, system or subsystem near, at or beyond the end of its normal useful life is not by itself a material defect.

Section 7308 says the chapter does not obligate the seller to make any specific investigation or inquiry, but the seller may not make representations the seller or the seller's agent knows or has reason to know are false, deceptive or misleading, and may not fail to disclose a known material defect. Under Section 7313, the seller's agent must advise the seller of these responsibilities.

What If the Inspection Turns Up Something New?

Under Section 7307, if disclosed information is later rendered inaccurate before final settlement because of an act, occurrence or agreement after the disclosures were delivered, the seller must notify the buyer of the inaccuracy. An attorney can say whether a given inspection finding falls under it.

If the sale falls apart and the seller relists, PAR Legal says the duty to disclose known material defects still applies. Its November 2020 article says "it does not matter how a seller learns of that material defect," and "This includes material defects identified through a buyer's inspection when the transaction does not ultimately close." It concludes: "In this situation, the seller's property disclosure must be updated."

PAR Legal says there is "no obligation for the seller to share the actual inspection reports with subsequent potential buyers," "nor is there a prohibition against it." A May 2024 PAR article adds that after a buyer terminates, "The seller can generally move on with a different buyer while the issue of breach and/or return of the deposit is unsettled." For the other side of a termination, see whether a buyer can back out after a bad home inspection.

What Limits a Seller's Liability Under the Disclosure Law?

Section 7309(a) says a seller is not liable for an error, inaccuracy or omission when the seller had no knowledge of it, when it rested on a reasonable belief that the defect had been corrected, or when it was based on information from a public agency, home inspector, contractor or another source the section lists, and the seller did not know of the error.

Section 7311(a) says a transfer is not invalidated solely because someone failed to comply with the law. A person who willfully or negligently violates it is liable for the buyer's actual damages. Under Section 7311(b), an action for damages for a violation must be commenced within two years after the date of final settlement.

Section 7314 lists three situations with no cause of action under the chapter: material defects disclosed to the buyer before the agreement was signed, defects that develop after signing, and defects that occur after final settlement.

This post is general information, not legal advice. For the steps that follow a report, see what happens after a home inspection in PA real estate deals, then confirm your own deadlines with your agent or a Pennsylvania real estate attorney.

FAQ

Can a seller back out after signing the agreement of sale in Pennsylvania?

Not freely. In Oliver v. Ball, the Superior Court said courts "must enforce specifically realty agreements breached by sellers," though it also described specific performance as a matter of grace rather than right.

Does a seller have to make the repairs a buyer asks for?

Not under the process PAR's articles describe. A 2015 PAR article says the agreement language it reviewed "doesn't create a good-faith obligation of seller to negotiate repairs." The seller may agree, offer something else, or decline.

What happens if the seller ignores a repair request?

A 2015 PAR article acknowledges that a seller may not answer at all. Under a 2019 PAR article, if no written agreement is reached by the end of the negotiation period, the buyer chooses whether to accept the property or terminate.

Does a seller have to give the next buyer the old inspection report?

PAR Legal says there is no obligation to share the report and no prohibition against it. Known material defects that report revealed are different: PAR Legal says the seller's disclosure must be updated to include them.

Can a sale be undone because the seller skipped the disclosure form?

Not for that reason alone. Pennsylvania's Seller Disclosure Law says noncompliance by itself does not invalidate the transfer (Section 7311(a)), and that subsection does not restrict or expand a court's authority to impose punitive damages.

Inspections for Buyers and Sellers From First Class Home Inspections

First Class Home Inspections is a Pittsburgh, PA inspection company, certified as an InterNACHI Certified Professional Inspector, serving Greater Pittsburgh and Allegheny, Washington, Fayette, Westmoreland, Indiana, Armstrong, Butler and Beaver Counties. Its pre-listing and buyer inspection services include the Pre-Listing Inspection and the Single Family Home Inspection, and its re-inspections can verify contractor corrections after a repair agreement. Questions about the agreement of sale itself belong with your agent or a Pennsylvania real estate attorney.

Visit First Class Home Inspections or call (570) 660-9337 today. Contact us for more information.