Almanza v. Bowen

230 P.3d 177, 155 Wash. App. 16
Court of Appeals of Washington·Decided February 8, 2010·No. No. 63153-5-I·Published·Cited by 7 cases

Opinion

Becker, J.

¶1 Joel and Cherae Almanza agreed to buy a home from Jay and Cindy Bowen. The Almanzas decided to back out before the sale closed and sued to recover their earnest money. By statute, prospective buyers who have not received a disclosure statement have the right to rescind their offer. The Bowens did not provide a disclosure statement. They argue the statute does not apply to buyers who rescind for reasons unrelated to the absence of disclosure. We hold that the statute provides a bright-line remedy of rescission. The trial court correctly granted summary judgment to the Almanzas.

¶2 On July 14, 2007, Joel and Cherae Almanza agreed to purchase a home under construction in Mount Vernon from Jay Bowen and his wife, Cindy, for $625,000. The Bowens owned the home with Kenneth and Dana Cuthbert. The purchase and sale agreement provided that Bowen would finish building out the home to the Almanzas’ specifications and that the parties would perform a walk-through inspection within five days of closing. On July 19, 2007, the Almanzas deposited $6,000 in earnest money into an escrow account. Under the purchase and sale agreement, the Bowens’ sole and exclusive remedy if the Almanzas failed to complete the purchase of the property without legal excuse was forfeiture of the earnest money.

[19]*19¶3 On August 23, 2007, the Almanzas, through their Realtor, e-mailed the Bowens’ Realtor to inform her that they had decided to “walk away” from the transaction because of their home “not selling even though they could have more time, lack of good communication from the seller/builder on budget info, etc.” The Almanzas faxed a rescission form to the Bowens and requested release of their earnest money “due to the fact the contract does not have a closing date, and [was] missing an initial on one addendum.” The Bowens did not authorize the escrow company to release the earnest money.

¶4 On April 17, 2008, the Almanzas sued the Bowens for an earnest money refund. In their motion for summary judgment, the Almanzas argued that they were entitled to rescission as a matter of law because the Bowens failed to deliver a seller’s disclosure statement as required by RCW 64.06.020. The Bowens did not dispute the lack of disclosure but argued that the statutory right of rescission did not apply because the statute was not intended to provide a remedy to prospective buyers who rescind for reasons unrelated to the absence of disclosure. The trial court granted the Almanzas’ motion for summary judgment, ruling that they were statutorily entitled to rescind the purchase and sale agreement and properly did so. The Bowens appeal.

¶5 We review summary judgment orders de novo and engage in the same inquiry as the trial court. Aba Sheikh v. Choe, 156 Wn.2d 441, 447, 128 P.3d 574 (2006). We will affirm a summary judgment if there are no issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Huff v. Budbill, 141 Wn.2d 1, 7, 1 P.3d 1138 (2000).

¶6 In 1994, the legislature adopted the residential real property transfers — seller’s disclosures act, codified at chapter 64.06 RCW. Laws of 1994, ch. 200. Within five days of the purchase and sale agreement, a seller of improved residential property must deliver to the buyer a statement containing disclosures prescribed by the statute. RCW [20]*2064.06.020, .030. Upon receipt of the disclosure statement, the buyer has a three day period within which to exercise the right to rescind the agreement and obtain immediate return of earnest money:

Unless the buyer has expressly waived the right to receive the disclosure statement, not later than five business days or as otherwise agreed to, after mutual acceptance of a written agreement between a buyer and a seller for the purchase and sale of residential real property, the seller shall deliver to the buyer a completed, signed, and dated real property transfer disclosure statement. Within three business days, or as otherwise agreed to, of receipt of the real property transfer disclosure statement, the buyer shall have the right to exercise one of the following two options: (1) Approving and accepting the real property transfer disclosure statement; or (2) rescinding the agreement for the purchase and sale of the property, which decision may be made by the buyer in the buyer’s sole discretion. If the buyer elects to rescind the agreement, the buyer must deliver written notice of rescission to the seller within the three-business-day period, or as otherwise agreed to, and upon delivery of the written rescission notice the buyer shall be entitled to immediate return of all deposits and other considerations less any agreed disbursements paid to the seller, or to the seller’s agent or an escrow agent for the seller’s account, and the agreement for purchase and sale shall be void. If the buyer does not deliver a written recision notice to [the] seller within the three-business-day period, or as otherwise agreed to, the real property transfer disclosure statement will be deemed approved and accepted by the buyer.

RCW 64.06.030. The buyer’s right of rescission also applies when the seller does not provide a real property transfer disclosure statement. In that case, the buyer may rescind right up until the closing date:

If the seller in a residential real property transfer fails or refuses to provide to the prospective buyer a real property transfer disclosure statement as required under this chapter, the prospective buyer’s right of rescission under this section shall apply until the earlier of three business days after receipt of the real property transfer disclosure statement or the date [21]*21the transfer has closed, unless the buyer has otherwise waived the right of rescission in writing. Closing is deemed to occur when the buyer has paid the purchase price, or down payment, and the conveyance document, including a deed or real estate contract, from the seller has been delivered and recorded. After closing, the seller’s obligation to deliver the real property transfer disclosure statement and the buyer’s rights and remedies under this chapter shall terminate.

RCW 64.06.040(3) (emphasis added).

¶7 The Bowens argue that the seller’s disclosures act cannot have been intended to allow a prospective buyer to back out of a sale when that decision was not motivated by the absence of disclosure or discovery of undisclosed defects. We disagree. The statute does not require a prospective buyer to state a reason for rescinding. Instead the statute provides a clear, decisive remedy to a prospective buyer who does not receive and has not expressly waived the right to a disclosure statement. The remedy is the right to rescind and to have earnest money returned. And if a seller does not deliver the required disclosure statement, the prospective buyer may exercise the right to rescind until “the date the transfer has closed.” RCW 64.06.040(3).

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Almanza v. Bowen, 230 P.3d 177, 155 Wash. App. 16 (Wash. Ct. App. 2010).

230 P.3d 177 (Almanza v. Bowen) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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