Buying or selling a home: purchase agreements, defects and closing disputes in Michigan

Possibly. A buyer with a signed written purchase agreement can ask a court to order the seller to complete the sale, which is called specific performance, or can sue for damages. The earnest money is governed first by the terms of the agreement itself.

Michigan's statute of frauds makes a contract for the sale of land void unless the contract, or a note or memorandum of it, is in writing and signed by the seller or by someone the seller authorized in writing (MCL 566.108). The first step is to confirm that a signed writing exists. In Zurcher v Herveat, the Court of Appeals held that the material terms of a binding contract for the sale of land are the property, the parties and the consideration, and it held that the lack of a closing date did not make the purchase agreement unenforceable, because the closing is presumed to occur within a reasonable time. The buyers there asked for specific performance and for damages, and the court explained that the judge, not a jury, decides the equitable claim for specific performance.

A seller's refusal to close is not always a breach. When the agreement makes the seller's duty depend on a condition precedent, meaning a fact or event that must happen before there is a right to performance, and the condition is not met, there is no cause of action for failure to perform (Harbor Park Market v Gronda, applying the definition in Mikonczyk v Detroit Newspapers). A party also cannot rely on the failure of a condition that the party caused, but the Court of Appeals in Harbor Park required affirmative interference or a refusal to take action the contract required, and it found no prevention where the seller's conduct was permitted by the contract. The seller there had accepted a competing offer for a liquor license sale, and the contract did not prohibit it from considering other offers.

A buyer who sues over the property can protect against a sale to someone else by recording a notice of the pendency of the action with the register of deeds in the county where the land lies, which makes the complaint constructive notice to later purchasers (MCL 600.2701). The general period for a suit for damages for breach of contract is 6 years (MCL 600.5807(9)), but a buyer who wants the house rather than money usually cannot wait that long. On the deposit, the agreement controls. In Worley v McCarty, the Supreme Court enforced a clause making the deposit the seller's liquidated damages against buyers who did not complete the purchase, so that clause operated against the buyer who failed to perform. Keep the signed agreement, every addendum, the deposit receipt and the seller's messages about backing out.

Authority: MCL 566.108; Zurcher v Herveat, 238 Mich App 267 (1999); Harbor Park Market, Inc v Gronda, 277 Mich App 126 (2007); Mikonczyk v Detroit Newspapers, Inc, 238 Mich App 347 (1999); MCL 600.2701; MCL 600.5807; Worley v McCarty, 354 Mich 599 (1958). Reviewed Oct. 2026.

A buyer usually loses the deposit by failing to complete the purchase without a right to cancel under the agreement, when the agreement makes the deposit the seller's liquidated damages. Whether a buyer can walk away without that loss depends on the contingencies and deadlines in the buyer's own agreement.

Michigan courts enforce a deposit forfeiture clause as liquidated damages when the damages from a breach are uncertain and difficult to ascertain at the time of contracting and the stated amount is reasonable in relation to the possible injury. In Worley v McCarty, the Supreme Court held that a $4,000 deposit forfeited by buyers who tried to rescind was not a penalty. The court noted that the parties stood in a relatively equal bargaining position and that the seller later resold the hotel property for $2,000 less. The buyers there claimed the title was not marketable, but the court held that the title insurance commitment satisfied the condition in the purchase agreement, so their attempt to rescind failed.

The way out without a loss is a contingency written into the agreement. A contingency is usually a condition precedent, which the Court of Appeals describes as a fact or event that the parties intend must take place before there is a right to performance (Mikonczyk v Detroit Newspapers). If the condition is not satisfied, there is no cause of action for failing to perform (Harbor Park Market v Gronda). Courts are not inclined to read a contract term as a condition precedent unless the language compels it, but they will enforce clear language as written, so the exact wording of the inspection, financing or approval clause matters.

Time and form also matter. The Supreme Court held in Waller v Lieberman that naming a date for performance does not by itself make time of the essence, so a buyer should check whether the agreement states that time is of the essence. Because a purchase agreement must be in writing, a change to it, including a deadline extension or a release of the deposit, should also be in a signed writing, since a modification of such an agreement must be in writing or supported by consideration to be enforceable (Zurcher v Herveat; MCL 566.108). Before cancelling, check the deadline, deliver whatever notice the agreement requires, and keep proof of delivery.

Authority: Worley v McCarty, 354 Mich 599 (1958); Mikonczyk v Detroit Newspapers, Inc, 238 Mich App 347 (1999); Harbor Park Market, Inc v Gronda, 277 Mich App 126 (2007); Waller v Lieberman, 214 Mich 428 (1921); Zurcher v Herveat, 238 Mich App 267 (1999); MCL 566.108. Reviewed Oct. 2026.

Only if the purchase agreement contains an inspection contingency, and then only by following its terms. The right to cancel or to ask for repairs comes from the wording of the clause, its deadline and its notice requirement, and any repair deal should be put in a signed amendment.

An inspection contingency is a term of the purchase agreement. It is usually written as a condition precedent, which the Court of Appeals describes as a fact or event that the parties intend must take place before there is a right to performance (Mikonczyk v Detroit Newspapers). If the condition is not satisfied, there is no cause of action for failing to perform the contract (Harbor Park Market v Gronda). Courts are not inclined to treat a stipulation as a condition precedent unless the contract language compels it, so the wording matters: what counts as an unacceptable defect, who must give notice, to whom, and by what date.

Michigan courts enforce clear contract language as written. In Harbor Park, the Court of Appeals held that plain and unambiguous contract language cannot be rewritten under the guise of interpretation, and it declined to add a limit that the clause did not contain. A buyer who relies on a contingency should therefore follow the notice method and the deadline in the agreement exactly, deliver the inspection report or the objection in the manner required, and keep proof of delivery.

If the seller agrees to make repairs or give a credit after the inspection, that is a change to the contract. A contract for the sale of land must be in writing and signed by the seller (MCL 566.108), and in Zurcher v Herveat the Court of Appeals stated that, because the purchase agreement was required to be in writing, any modification of it also had to be in writing or supported by consideration to be enforceable. A signed amendment that lists the repairs, who performs and pays for them, the completion date and what happens if they are not finished is safer than an agent's assurance or a text message.

Authority: Mikonczyk v Detroit Newspapers, Inc, 238 Mich App 347 (1999); Harbor Park Market, Inc v Gronda, 277 Mich App 126 (2007); Zurcher v Herveat, 238 Mich App 267 (1999); MCL 566.108. Reviewed Oct. 2026.

Partly. An as is clause shifts to the buyer the risk of conditions that were unknown or that a reasonable inspection would have revealed, but it does not protect a seller who made fraudulent representations before the buyer signed the agreement.

In Lorenzo v Noel, the Court of Appeals held that as is clauses allocate the risk of loss arising from conditions unknown to the parties, which bars a mutual mistake claim, and that they also transfer the risk where a defect should have been discovered on inspection but was not. The court held that they do not transfer the risk of loss where the seller made fraudulent representations before the buyer signed a binding agreement. The buyer there had evidence that bowed and cracked basement walls had been covered with paneling, and the court held that the seller's claim that she knew nothing of the defect created a question of fact.

Coosard v Tarrant applied the rule to a fully integrated purchase agreement with an as is clause. The Court of Appeals held that the as is provisions precluded an innocent misrepresentation claim as a matter of law, but that an as is clause does not protect a seller against a fraud claim merely because the buyer could have discovered the truth. To defeat a fraud claim that way, it must have been reasonable to expect the buyer to find the defect on inspection, and it must also have been reasonable for the buyer to conduct the inspection in the first place. The court added that buyers have no independent duty to investigate unless they were given some information or indication that further investigation was needed.

The Coosard buyers still lost in the end, because the Court of Appeals affirmed on the ground that the evidence did not show a knowing misrepresentation by the seller about the encroachment. The practical point is that an as is clause does not erase a seller's knowing falsehoods made before signing, but the buyer has to be able to prove what the seller knew and said. Listing descriptions, texts and emails, the seller's disclosure statement, repair invoices and earlier inspection reports are the usual proof.

Authority: Lorenzo v Noel, 206 Mich App 682 (1994); Coosard v Tarrant, 342 Mich App 620 (2022). Reviewed Oct. 2026.

It depends on the financing contingency in the agreement. A buyer who could not obtain the loan on the terms and by the date the clause states is in a different position from a buyer who changes his or her mind, but a buyer whose contingency has ended, or who caused the loan to fail, risks the deposit.

A financing contingency comes from the purchase agreement, not from a Michigan statute. It is usually written as a condition precedent, a fact or event that must take place before there is a right to performance (Mikonczyk v Detroit Newspapers). When a condition is not satisfied, there is no cause of action for failing to perform the contract (Harbor Park Market v Gronda). Whether the clause applies to this loan, this lender and this denial depends on its exact wording, because courts enforce clear language as written.

The contingency ends when the clause says it ends, such as on a stated date or on receipt of a loan commitment. The Supreme Court held in Waller v Lieberman that naming a date for performance does not by itself make time of the essence, but that case turned on a contract with no clause about time, so a buyer should check whether the agreement states that time is of the essence. An extension or waiver of the financing deadline should be in a signed writing, because a modification of a purchase agreement that must be in writing also has to be in writing or supported by consideration (Zurcher v Herveat; MCL 566.108).

A party that causes a condition to fail cannot rely on the failure. Harbor Park states the rule in terms of the promisor and requires affirmative interference with the condition or a refusal to take action the contract required. The court there discussed Stanton v Dachille, where a party that stopped platting the property it had sold was held to have waived the buyers' financing and soil-testing conditions. On the deposit, the agreement controls, and in Worley v McCarty the Supreme Court enforced a forfeiture of the deposit as liquidated damages against buyers who did not complete the purchase. Keep the loan application, the denial letter and the dates of every notice.

Authority: Mikonczyk v Detroit Newspapers, Inc, 238 Mich App 347 (1999); Harbor Park Market, Inc v Gronda, 277 Mich App 126 (2007); Waller v Lieberman, 214 Mich 428 (1921); Zurcher v Herveat, 238 Mich App 267 (1999); MCL 566.108; Worley v McCarty, 354 Mich 599 (1958). Reviewed Oct. 2026.

The options come from the purchase agreement. Before closing, the buyer can put the problem in writing and ask for a repair or credit in a signed amendment, and can decline to close only if the agreement made the condition a requirement. After closing, the deed is presumed to take the place of the purchase agreement, which is why the issue should be settled first.

Start with the wording. The Court of Appeals distinguishes a condition precedent, which is a fact or event that must take place before there is a right to performance, from a promise, which creates a right or duty (Mikonczyk v Detroit Newspapers). A clause saying the seller will deliver the home in its present condition could be either, and courts are not inclined to treat a stipulation as a condition precedent unless the language compels it. If the clause is a true condition and it is not met, there is no cause of action against the buyer for failing to close (Harbor Park Market v Gronda).

Refusing to close without a contract right to do so is risky. In Worley v McCarty, buyers who tried to rescind lost their deposit, which the Supreme Court enforced as liquidated damages. The Supreme Court held in Waller v Lieberman that naming a date does not by itself make time of the essence, and it described the equitable rule that a party who wants to hold the other side to a deadline when the contract does not make time essential gives a distinct notice that allows a reasonable time to perform. A written notice that describes the problem, proposes a fix and sets a reasonable date puts the buyer in a stronger position than a phone call.

The closing itself matters. Under the merger doctrine, a deed made in full execution of a contract for the sale of land is presumed to merge the provisions of the preceding contract, including prior negotiations and agreements (Johnson Family Ltd Partnership v White Pine Wireless). The Court of Appeals added that the rule is not absolute: unperformed portions are not merged where the deed represents only partial performance, and a court sitting in equity can reform a deed for mutual mistake. Any agreed repair, credit or holdback should therefore be in a signed amendment before the deed is delivered (Zurcher v Herveat; MCL 566.108).

Authority: Mikonczyk v Detroit Newspapers, Inc, 238 Mich App 347 (1999); Harbor Park Market, Inc v Gronda, 277 Mich App 126 (2007); Worley v McCarty, 354 Mich 599 (1958); Waller v Lieberman, 214 Mich 428 (1921); Johnson Family Ltd Partnership v White Pine Wireless, LLC, 281 Mich App 364 (2008); Zurcher v Herveat, 238 Mich App 267 (1999); MCL 566.108. Reviewed Oct. 2026.

It depends on the claim. A claim for breach of contract is 6 years, a fraud claim falls in the 6-year catch-all, an injury-to-property claim such as negligence is 3 years, and a claim against the contractor who built an improvement has its own 6-year limit from occupancy or acceptance. A fraudulently concealed claim can be brought within 2 years after discovery.

Michigan sets different limitation periods by type of claim. An action for damages for breach of contract is generally 6 years (MCL 600.5807(9)). An action for injury to property is 3 years (MCL 600.5805(2)). Other personal actions, which include fraud, are 6 years (MCL 600.5813; Boyle v General Motors Corp). A claim usually accrues when the wrong was done, regardless of when damage results (MCL 600.5827), so the label on the claim and the date of the wrong decide which clock applies and when it started.

In Boyle, the Supreme Court held that a fraud claim accrues when the wrong is done rather than when the plaintiff discovers it, and it rejected a discovery rule. The court explained that the wrong is done when the plaintiff is harmed. For a home buyer, that can mean the clock started at the closing, not when the buyer first noticed a leak or a crack. The statute on fraudulent concealment is a separate protection: when a person liable on a claim fraudulently conceals the claim or the identity of the person liable, the action may be brought within 2 years after the plaintiff discovers or should have discovered it, even though the ordinary period has run (MCL 600.5855).

A claim against a contractor who made an improvement to the real property has its own rule. Damages for injury to property arising out of a defective or unsafe condition of an improvement must be sued on within 6 years after occupancy, use or acceptance of the improvement. If a defect that proximately caused the damage resulted from gross negligence, the claim may be brought within 1 year after discovery, but never more than 10 years after occupancy, use or acceptance (MCL 600.5839(1)). That section reaches the contractor who made the improvement, not a seller who did not. Write down the closing date, the date each defect was found, and what the seller said before signing.

Authority: MCL 600.5807; MCL 600.5805; MCL 600.5813; MCL 600.5827; Boyle v General Motors Corp, 468 Mich 226 (2003); MCL 600.5855; MCL 600.5839. Reviewed Oct. 2026.

The agreement controls. A named closing date is not treated as essential unless the agreement makes time of the essence, but a delay can still be a breach, the deposit can be at stake, and any extension of closing or move-out should be in a signed writing.

The Michigan Supreme Court held in Waller v Lieberman that naming a date on which payment is due does not by itself make time of the essence, and it quoted authority that a vendor who has waived strict compliance with the time for payment cannot use his own indulgence as a trap, so that time becomes essential after the waiver only where the vendor makes it so by proper notice and demand. If the agreement says time is of the essence, the date carries more weight, so check the closing clause before assuming a few days' delay is harmless. A buyer who cannot perform at all risks the deposit, which the Supreme Court enforced as liquidated damages in Worley v McCarty.

A delay in closing also moves money between the parties. In a sale between private parties, and absent an agreement to the contrary, the seller is responsible for the part of the annual taxes levied during the 12 months before the day title passes that runs from the levy date up to, but not including, that day, and the buyer is responsible for the remainder (MCL 211.2(4)). A later closing date changes the number of days each side pays, so the closing statement should be checked against the actual closing date.

Extensions should be written down. A contract for the sale of land must be in writing and signed by the seller (MCL 566.108), and the Court of Appeals stated in Zurcher v Herveat that a modification of a purchase agreement that was required to be in writing also had to be in writing or supported by consideration to be enforceable. The same is true of a seller's request to stay after closing. A seller who stays in the home after closing is no longer the owner, so the arrangement is a lease or occupancy agreement. The statute of frauds voids a lease for longer than 1 year unless it is in a signed writing (MCL 566.108), and the separate writing rule for interests in land excepts leases for a term not exceeding 1 year (MCL 566.106), but a short written occupancy agreement that fixes the move-out date, a daily charge, a deposit and who insures the home avoids most disputes.

Authority: Waller v Lieberman, 214 Mich 428 (1921); Worley v McCarty, 354 Mich 599 (1958); MCL 211.2; MCL 566.108; Zurcher v Herveat, 238 Mich App 267 (1999); MCL 566.106. Reviewed Oct. 2026.