We've all have had deals die on the vine, so to speak. I had one about 5 years ago where my buyer just decided he didn't want to buy the property anymore. He didn't bother to let me or his attorney know until about 5 days before closing! If I remember correctly, attorney review was closed already, so there was a fight with the seller for the earnest money. The seller obviously wanted to keep it all as monies for the buyer defaulting. It went back-n-forth for a while until they both agreed to split the $15K earnest money. So my buyer lost $7500 for simply waiting too long to decide he didn't want the property. Had he decided he didn't want to buy it during the attorney review, he would have gotten it all back.
If the buyers reason is due to financing, then the seller can try and get a mortgage for the buyer using the parameters set forth in the contract, the problem there is that the buy can easily change their credit scores to stop the sale if they do not want be forced into purchasing the property.
So with every situation being different and this state's real estate legal side being run by Real States Attorneys, there are very few rights the buyers or sellers have in forcing the buyers or sellers to completely follow the terms of the contract. The time and money that is required to enforce these contracts with the amount of contingencies and loophole that have been added over the years, it is wiser to just try and find a new buyer for your property.
The good news for you is that in our market today, we are down in inventory and we have an increased amount of buyers in the market. So your broker should be able to re-launch your property and find more buyers for your place that might be able to supply you with a stronger and better offer then the current one that is cancelling on you.
I hope it all turns out for the best and good luck.
Remember both seller and buyer has signed off on the contract that is why it is so important that both parties have good attorneys and good brokers representing them.
In the real world a buyer does has the right to walk away from a purchase if the home inspector finds major defects in the property that were not disclosed, or during the attorney review the attorney finds something wrong and wisely advises his/her client to walk away from the purchase listing the reasons why.
Ah, did I forget the mortgage contingency? No I didnâ€™t. In todayâ€™s economic climate with the new rules put in place for obtaining a mortgage, I feel a buyerâ€™s broker is doing his/her client a disservice is if they have reached the contract stage and the client has not already been pre-approved for â€œaâ€ purchase. Also, while we rely on our mortgage lenders to educate our buyers about why not to open any new lines of credit after being pre-approved, we as brokers must remind them not to do so as well. If our buyer opens a new line credit after the pre-approval, the loan ratio may change and they may no longer qualify for the loan. I have seen this happen.
What happens if all the contingencies have expired and have been met and the buyer simply wants to walk away? If the seller has been â€œdamagedâ€ the seller has the right to retain the earnest money as damages. Likewise, depending on how the contract was filled out the seller may be entitled to entire value of the contract. As simple as this sounds it is not. The buyer most agree and sign of to release the earnest money to the seller. If the buyer does not agree to release the earnest money, costly litigation could follow. The above would be handled by each parties attorney and is a worse case scenario.
It depends on what the contract states, and why the buyer, "wants out". Did the buyer make his/her offer to purchase the home contingent upon a home inspection, attorney review period, mortgage financing, the sale of his/her home? Was a problem discovered during the inspection, attorney review etc...? Did he she notify you that a contingency had not been met? Did he/she notify you within the agreed upon time-frame? Typically, if the buyer is truly in breach of the contract, the seller may be able to keep the earnest money. However, the bottom line is you should look closely at the contract that both parties have signed, and consult with a real estate attorney to determine your rights.
The end point is to consult with an attorney. There is much room in between, and far more information is needed to begin to comment. The longer the time frame since the acceptance by all parties, the less likely exiting will be without cost and litigation.
To make sure that your sale closes, list with the IPC Group
Sohail A. Salahuddin | Group Founder
Innovative Property Consultants Group | Sales and Leasing
Jameson Sothebyâ€™s International Realty
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