Definition
Rescission is court-ordered cancellation of the contract, returning both parties to their pre-contract status. It's available when fraud or major misrepresentation occurs.
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Rescission terminates the contract and attempts to restore both parties to their pre-contract status. This remedy is typically sought when one party has committed fraud or made material misrepresentations. If rescission is granted, earnest money is returned and the transaction is cancelled. This is different from a contingency termination, which is pre-authorized in the contract.
Pro Tip
Document misrepresentations carefully. Fraud might allow rescission even after closing.
Example
The buyer sought rescission based on the seller's failure to disclose major structural damage.