Business Law
Assume the following:
Phillip agrees to sell his mixed-use property in Bedford Falls to Nancy for $2,000,000. Phillip is aware that there was an oil spill on the property, which can only be discovered by drilling down thirty feet into the soil. Phillip says nothing about this to Nancy. In addition, there is a bed-bug infestation. Phillip and Nancy enter into a contract of sale but there are several contingencies. Nancy is applying for a mortgage from Bailey Building & Loan (BBL) at a rate of interest of 5%. Also, the contract is contingent on an assessment of the condition of a 30-year-old oil burner, which must show it is in good working order. Also, there is a mechanics lien against the property for $40,000 for a brick pointing that Phillip disputed with the contractor because he thought it was not done properly. Nancy has deposited 20% of the purchase price in an escrow account and a closing date is set for three months in the future. Nancy fails to have the inspection performed and in addition, BBL can only offer her a mortgage at a 6% rate.
(1)Based on the above facts, on which legal bases can Nancy cancel the contract and why? You must recite the legal principle or example in the text to receive credit for your answer.
(2)What if the lien was not discovered before the closing on the property? How could Nancy have protected herself? Explain.
(3)What if Nancy went through with the sale anyway, and only discovered the oil spill ten years after the closing. Would she have any recourse? Explain the underlying legal principle and support your answer by citing to the text.
(4)Assume Nancy does not remediate the conditions in the building. Could her residential tenants sue her?
