As a real estate attorney in Summerville, South Carolina, I have experience with people who did not get what they paid for. If you purchase a product, the price of the item should be proportional. For example, you purchased a large-ticket item, such as a house, and soon discover that the seller did not disclose an important fact about the property – the entire plumbing needs to be replaced. Meanwhile, the home’s value has declined significantly since the purchase. Now could be the time to consider rescinding the contract and seek restitution of the purchase price. In this article, I will explain reasons for contract rescission, undue influence, duress and menace and nonperformance in South Carolina.
What Are Reasons for Rescission in South Carolina?
Rescission would be a much better option than suing because you would have been limited to the difference between the price paid and the assessed value of the property. A rescission makes sense when the reimbursement of the purchase price is more important than living in the house. If you find yourself in this situation, one of these common reasons for rescission may apply.
Mutual Consent. A purchase contract may be rescinded by the consent of all parties, regardless of its expressed terms.
Mistake of Law. A purchase agreement may also be rescinded if the rescinding party’s consent is based on a factual or legal mistake. A mistake of fact may be either mutual or unilateral. A unilateral mistake occurs when only one party is mistaken as to the subject matter or the terms contained in the contract agreement as opposed to both parties.
A mistake of law must be material to warrant rescission and a mutual mistake of law is automatically grounds for rescission. A mistake of law is mutual only when the parties are mistaken in the same way.
Fraud. Common characteristics of fraudulent property purchases include the use of straw buyers. A straw buyer is someone who makes a purchase on behalf of another. A straw buyer is used when the real buyer cannot complete the transaction. It is not necessarily illegal to use a straw buyer for a purchase, except when the transaction involves fraud or purchasing goods for someone who is legally prohibited from making the purchase themselves.
Inflated appraisals. When the potential homebuyer consults a mortgage lender about purchasing a home, they receive a Good Faith Estimate (GFE). A GFE is a document that includes the breakdown of approximate payments due upon the closing of a mortgage loan.
Included in this estimated cost breakdown is a fee for the required appraisal. An appraisal is an estimated value for the property and is the minimum amount needed to close the loan. Should the appraised value of the home be too high or too low, then the loan closing will most likely be canceled.
Steps to take to avoid appraisal fraud include:
Hiring an independent appraiser. It will ease your mind that the risk you are taking should not be an issue. I would suggest ensuring the appraiser is state certified.
Asking the appraiser for references. There are occasions where the assigned appraiser sends an inexperienced, non-licensed person to inspect a property as a cost-cutting measure. It would be nice to know if this is a part of their business model.
What is Considered Undue Influence, Duress, and Menace in South Carolina?
The use of undue influence, duress and/or menace by one party over another puts the free will of the entire contract into question and can lead to the contract being declared unenforceable and voidable by the victimized party.
To prove undue influence, a party must show that the contract was ratified with someone who possesses weaknesses that make him likely to be affected by influencing.
Examples of undue influence, duress and menace include:
- Using a confidential relationship to receive an unfair advantage
- Taking advantage of another’s weakness of mind
- Taking a grossly unfair advantage of another’s distress
Prejudice to Public Interest. Rescission is also available if the purchase agreement is unlawful for reasons not apparent in the terms of the contract and if the parties are not equally at fault.
Failure of Consideration. The State of South Carolina passed laws to help circumvent a situation involving a contract between two parties where one fails to fulfill their responsibility of the transaction. The other party may have a restitution or unjust enrichment claim to recover.
(a) A contract may be rescinded if all the parties thereto consent.
(b) A party to a contract may rescind the contract in the following cases:
(1) If the consent of the party rescinding, or of any party jointly contracting with him, was given by mistake, or obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party.
(2) If the consideration for the obligation of the rescinding party fails, in whole or in part, through the fault of the party as to whom he rescinds.
(3) If the consideration for the obligation of the rescinding party becomes entirely void from any cause.
(4) If the consideration for the obligation of the rescinding party, before it is rendered to him, fails in a material respect from any cause.
(5) If the contract is unlawful for causes which do not appear in its terms or conditions, and the parties are not equally at fault.
(6) If the public interest will be prejudiced by permitting the contract to stand.
What is Nonperformance in South Carolina?
A party to a contract may rescind it due to substantial nonperformance or breach. The party who knowingly fails to fulfill obligations under the contract cannot argue that the contract has injured them by its termination.
If you are in a contractual agreement and feel the need to rescind, there may be many remedies available to you. Contact the Watts Law Firm for a free consultation. Let’s discuss the options for a successful outcome.