During an inspection, if a buyer uncovers major structural issues leading to a contract termination, what is this called?

When a buyer discovers major structural issues during an inspection, leading to the termination of a contract, this situation typically results in a mutual rescission of the contract. Mutual rescission is an agreement between both parties to cancel the contract, often due to satisfactory grounds such as the discovery of significant problems that were not disclosed prior to the agreement. This allows both the buyer and the seller to release themselves from their contractual obligations without further liability.

In real estate transactions, when a material defect is found that was not known prior to the agreement, it can serve as a legitimate reason for the buyer to withdraw from the contract. The parties agree to return to their prior positions before the contract was formed, effectively nullifying the agreement. This process maintains fairness and equity, allowing both parties to disengage without negative repercussions associated with the contract's performance.