Can a buyer’s corrective proposal be rescinded?

Can a buyer change his or her corrective proposal or must it remain static for the full five-day negotiation period?

A buyer submits a corrective proposal following an inspection. The corrective proposal sought a reduction in the purchase price of $5,000. Midway through the negotiation period, the seller countered with an offer of $2,500. Buyer, who by then had cold feet, rejected seller’s counter and adjusted his corrective proposal upward to $10,000.

Whether a buyer can withdraw or change a corrective proposal if initially countered or rejected in the negotiation period is a matter not resolved by our courts. Considering the plain language of the contract, however, it would seem likely that a court would hold the buyer to the terms of her corrective proposal for the duration of the negotiation period. Ordinarily, offers are revocable. An offer to purchase real estate at a specific sum can be withdrawn unless and until an acceptance has been delivered. So why can’t buyer’s corrective proposal be rescinded?

The language in PAR’s Standard Agreement (ASR) regarding the submission of a corrective proposal is binding as part of the agreement between the parties, and it is clear. It provides that a corrective proposal has to be submitted during the contingency period. The only other options within the contingency period are to accept the property, as is, or terminate the agreement of sale. The parties then enter a negotiation period that is also clearly defined in the agreement.

During the negotiation period, the seller may try to negotiate a mutually-acceptable agreement, or satisfy the buyer’s corrective proposal (and as we know from the discussion above, the seller may also do nothing). The agreement, however, does not provide the buyer with the right to terminate the agreement during the negotiation period.

The contract would say if the buyer could withdraw or amend the corrective proposal and terminate the agreement during the negotiation period. Rather, it restricts time when buyer may terminate the agreement to the contingency period and following the negotiation period if the seller does not agree to perform all of buyer’s corrective proposals.

The conclusion here is  not the law, as the law is what the judge says it is, and quoting me may do more harm than good. It does, however, represent what I anticipate a court would do and regardless of whether I am correct, it underscores the need to carefully draft a corrective proposal. Assume that once submitted, the buyer will be fully committed to that proposal and must live with the consequences if accepted or rejected.

Editor’s note: This is the second of a two-part series. Read the first article in the series: “Post-inspection negotiation – Is “good faith” required?”