A Michigan appeals court has overturned a $1.55 million judgment against a couple who backed out of buying a luxury home after an inspection revealed serious problems with the property.
In a ruling published on October 23, 2026, the Michigan Court of Appeals cleared the couple of responsibility for the damages, ending a legal dispute that lasted six years. The appeals court found that the sellers had failed to prove that the buyers broke their contract when they asked for a lower price after the home inspection. According to court documents published by Justia Law, the dispute began in 2020 when the couple agreed to buy the home for $1.275 million.
The purchase agreement included standard inspection conditions, which allowed the buyers to check the property's condition before completing the sale. During a professional inspection, inspectors and structural experts found several serious problems with the house. After reviewing the findings, the buyers formally asked for a $150,000 reduction in the agreed price to help cover the expected cost of repairs.
Failed negotiations lead to litigation
The sellers refused to lower the price, and negotiations broke down. When the buyers declined to pay the original $1.275 million without repairs or financial compensation, the sellers filed a lawsuit, claiming that the couple had broken the contract. A trial court initially ruled in favour of the sellers. It held the buyers responsible for failing to complete the purchase. The lower court ordered the couple to pay $1.55 million in damages.
This amount included the difference in the home's resale value, the costs of holding the property and legal interest that had built up during the years of litigation. The buyers then appealed the decision. They argued that the purchase agreement allowed them to request a lower price or cancel the deal if the home inspection revealed problems that they found unacceptable.
Appeals panel sets aside damages
After reviewing the lower court's decision, the Michigan Court of Appeals found that the trial judge had misunderstood the contract's inspection terms.
The three-judge panel said that asking for a price reduction because of documented defects in the property did not amount to breaking the agreement. The appeals court explained that the buyers had acted within the terms of the contract when they asked for changes based on the home's condition.
As a result, the court overturned the full $1.55 million judgment that had originally been awarded to the sellers. The ruling explains the legal protections available to home buyers under standard inspection clauses in Michigan real estate contracts. By overturning the lower court's decision, the appeals court confirmed that buyers who honestly negotiate for repairs or a lower price based on inspection findings do not automatically lose their contractual rights or become liable for financial penalties.