California Real Estate Broker ExaminationReal Estate PracticeHard
A buyer is interested in purchasing a property that is part of a federally regulated subdivision. The developer has provided the buyer with a 'Property Report' as required by law. The buyer reviews the report and decides they no longer wish to purchase the property. If the buyer received the Property Report less than three business days before signing the purchase agreement, what is their right regarding rescission?
- AThe buyer has no right of rescission once the report is received.
- BThe buyer has a 14-day right of rescission from the date they received the Property Report.
- CThe buyer has a 7-day right of rescission from the date they signed the purchase agreement.
- DThe buyer has a 3-day right of rescission from the date they received the Property Report.
Show answer & explanationAnswer & explanation
Correct answer: C. The buyer has a 7-day right of rescission from the date they signed the purchase agreement.
Under the Interstate Land Sales Full Disclosure Act (ILSFDA), if a buyer receives the Property Report less than three business days before signing the contract, they have a 7-day right of rescission from the date of signing the purchase agreement. If the report was received at least three business days before signing, the right of rescission is 7 days from receipt of the report.
Why the other options are wrong
- A. This is incorrect; ILSFDA provides specific rescission rights.
- B. This is incorrect; the 14-day period is not standard for ILSFDA rescission under these circumstances.
- D. This is partially correct for situations where the report was received at least three business days *before* signing, but not for the scenario described.
ILSFDA Rescission Rights
Buyer's statutory right to cancel a purchase agreement for property in a federally regulated subdivision, contingent on when the Property Report was received.
- Governed by Interstate Land Sales Full Disclosure Act (ILSFDA).
- Property Report must be provided to buyer.
- If report received <3 days before contract: 7-day rescission from contract signing.
- If report received >=3 days before contract: 7-day rescission from report receipt.
Memory trick: Report's late? Wait 7 days from signing, don't hesitate!