Under Contract on Contanimated Property

[James Letchford]

In September 2017, I went under contract for a property in Southern New Jersey for $94,500. It needed $65K to give it an ARV of $200K. During my inspection period, we noticed signs of an oil spill around the tank outside. I paid an Evironmental Specialist approximately $1200 to research all the records with New Jersey Department of Environmental Protection. (This inspection was strictly an administrative evaluation of the property.) At the conclusion of the investigation, it was determined that there was "No Further Action Required" for the property.

HOWEVER, the report never referenced or noted the several water monitoring wells located on the property, so I demanded a site investigation and testing. These site investigations, coupled with soil testing and lab tests, caused several signed ammended contracts between me and the seller (which I believe is a wholesaler) over the last several months.

At the beginning of March, the seller approached me via my RE agent about my interest in a cash deal. After some back and forth, we settled on $52,500 with a closing date of Mar 30. If I didn't close by Mar 30, then I'd lose $2,500 of my $5,000 earnest money deposit.

Upon signing the cash deal contract, I employed the Environental Specialists for ($3,800) to do a full assessment and scope of work for the property. I received the project costs for full remediation of the soil and all areas effected today:  $80-90K of work will be required to remediate the subject property and neighboring property effected.

At a $52,500 sale price, this isn't a project that I can take on with a $80-90K remediation ahead. I'd rather lose the $10K or so I have into inspections, consultants, etc. than lose $80-90K on the back end. However, I told my agent that I'd be willing to assume the entire project for my earnest money deposit (which I'd lose anyway) of $5K. I truly believe that the seller has zero desire to take on a project of this magnitude. And at a $5K purchase price, this could turn into a very solid investment for me; as I'm willing to accept the headache.

Here's what I need help on:  The broker/seller brought up that they could sue me for breach of contract and the carrying costs associated until they sell the property. 

• I was originally under contract for $94,500 that was ammended several times while we continued our due diligence. The oil issue was known by the seller from onset. Can any portion of the oil issues be considered carrying costs? 
• I went under a cash contract on/around Mar 1 to close on Mar 30. I haven't closed on the property, but have found an exorbitant amount of remediation required. What are my rights to bail on this current cash contract?
• I'm assuming that the only carrying costs that I could be sued for started Mar 1. Is this a correct assumption?

Thanks for any help you can contribute.