What are options if buyer defaults on day of sale? No contingency on offer,etc.

Asked by Sj, Texas Fri Apr 18, 2008

We were scheduled to close on our home today and close on new home 300 miles away Monday with equity from existing home. There was no contingency on the contract but buyes house sale did not go through so they chose not to sign on our contract. We have movers coming tomorrow and now are up in the air. If they do not go through with the sale in timely manner what are our options?

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8
Jim Johnson, , 78233
Sat Apr 19, 2008
This is a legal question, and few of us are likely qualified to answer your question fully. Before you do anything, consult with an attorney.
1 vote
T.E. & Naima…, Agent, Dallas, TX
Fri Apr 18, 2008
Did they not put the sale of their house as a contingency on your contract? How about their financing? could they qualify to buy your house even if their house doesn't sell? These are some of the questions that should be asked at the time of the offer. Not the day of closing.

Based on the little information we have here from and assuming that you don't have a Realtor representing you, if there was no contingency for the sale of their house and if there was no contingency of financing on the contract, then the buyers are in default. You have 2 options: Keep their earnest money and release them of the contract and cancel the movers and find another buyer: 2. Enforce specific perfomance which means that you can sue them to go through with the purchase but only if they can qualify for the loan and they are choosing not to.

Note that I am not an attorney, please do not construe this as legal advice. Actually, you probably need to contact an attorney to get professional advice.

Sorry for this misfortune, I hope they'll come around and can purchase it so you can both move on with your lives.

Naima
Web Reference:  http://www.sumnerrealty.com
1 vote
Rich Raynor, Agent, Roseburg, OR
Tue Apr 22, 2008
In the state of Oregon, if you have a signed contract, the only compensation the seller is entitled to is the earnest money. The seller can not sue for performance of the contract or damages. This is why, as a seller, you want to have a reasonable amount of earnest money already held at the title company or in the listing real estate firm's client trust account. Never make earnest money payable at closing. If you do, and the buyer does not complete the transaction, you have to initiate legal action to secure the earnest money.
0 votes
Bruce Lynn, Agent, Coppell, TX
Sat Apr 19, 2008
First of all do you have a signed contract? If not then I would think there is not much you can do. If you do have a signed contract see below.

Tough options....you really need to consult an attorney and/or your agent.

You can sue for specific performance if the buyer has cash, or you think they can raise it to purchase home. If they were borrowing and need to borrow to purchase you can't force the lender to give them a loan. If loan is approved and funded already you could potentially sue for specific performance. Obviously this does take time and I'd think you can't sell the house to someone else in the meantime. Otherwise you can cut them loose, but it takes about 3 weeks to do this if you want the earnest money. You could cut them loose the next day if you don't want the earnest money and you terminate and refund it to them. If you want it you'll need to follow the guidelines of your contract and title company. You can work with the title agent to write a demand letter for the earnest money and see if the buyer will respond.

Probably best to let them go and get working on a new buyer. Can I recommend a realtor to you to get working on your home sale?
Web Reference:  http://www.teamlynn.com
0 votes
Keith Sorem, Agent, Glendale, CA
Sat Apr 19, 2008
SJ
I am amazed at your post. Did you list with a Realtor or sell by owner? Echoing the other suggestions regarding consulting an attorney, a few other tips:
1. In a professionally handled transaction there a few "surprises". A buyer's in ability to sell their home would have been known and monitored.
2. Not having the contract SIGNED is unbelievable. As one poster noted, no signature, there is no contract.
3. I also like the post about consulting with the real estate professionals involved in this transaction. If there were no such professionals involved, you can now, with hindsight, see that "saving money on the commission" can be an expensive lesson.

I am very sorry for your situation, but that is why there are trained people that could have helped you avoid your predicament...Consult an attorney but be prepared to write some big checks.
0 votes
Sylvia Barry,…, Agent, Marin, CA
Sat Apr 19, 2008
Hi Sj:

if the buyers did not sign on your contract, there is no contract between you and the buyer because verbal agreement is not a contract. As a matter of fact, you might not have a buyer at all unless I misunderstand your question.

Unless we know more, it's hard to advise. I do agree with Jim, you will probably want to seek Attorney advice on this.

Sylvia
0 votes
Paul Francis, Agent, Las Vegas, NV
Fri Apr 18, 2008
SJ - Questions such as this are precisely why Real Estate agents still have jobs. I'm licensed in two states (Broker in Illinois and Saleperson in Nevada) and have handled several relocations over the years.

There are a completely different set of potential scenarios for this situation dependent on norms for state laws, local norms, etc.. (Even if you were in Illinois or Nevada, I would give you the same advice as below..)

Nobody should even be attempting to answer this question without specific details of the contracts you are using on both transactions and obviously this is not the place to post those details. I would highly suggest you contact the real estate professionals involved in these transactions for further guidance which should include referrals to professional legal advice. (Attorneys)

Paul Francis, CRS
Coldwell Banker Premier
http://www.LasVegasHomeSearch4u.com
702.592.3058
0 votes
Dallas Texas, Agent, Dallas, TN
Fri Apr 18, 2008
Where is your real estate agent for the sale of your house? And the purchase of your new home?
Without reading all the contracts it is difficult making a statement on your best interest

Contact your real estate agent(s). Before any of these 2 problems become legal issues
Web Reference:  http://www.lynn911.com
0 votes
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