The purchase or sale of a piece of real estate can often be a long and complicated process. With proper due diligence, communication and adherence to the process, most real estate deals will go off without a hitch – but sometimes a deal can fall through, leaving both buyer and seller in some uncertainty.
Read on to get an idea of what to expect when a real estate deal falls apart:
What to expect as the Buyer
If a deal fails at the last minute, the buyer is likely to have already paid their initial deposit. This will be held by the seller’s real estate agent, but can only be returned if all parties agree to sign a mutual release form. This prevents buyers from backing out of purchases last minute without a good reason. If a buyer and seller have a strong disagreement that has led to a failed deal, it is possible that legal help will need to get involved in order to recover this deposit from the seller’s agent.
If you, as the buyer, are attempting to terminate a real estate deal, it is likely that the seller will not agree to sign the mutual release of your deposit until such time that they have relisted the property for sale and ensured that it sells to another party for what you agreed to pay. At the same time, the sellers will want to recoup any damages they sustained as a result of your breach of the agreement. These may include but are not limited to, storage fees, ongoing property taxes or mortgage interest.
What to expect as the Seller
First of all, the seller will be accountable to the buyer if they chose to not close the deal. This means that the buyers will source out a similar property and may have a claim against the original seller if they had to pay more for the second property. In addition, a seller that chooses to not close may be on the hook for things, such as but not limited to, damages for alternative accommodations, storage fees and additional moving expenses incurred by the purchaser as a result of their failure to close.
If you are a seller and it is the buyer that wants out of the deal; for example, because the buyer believes that the house is worth less than when they entered the agreement, or because their bank has appraised the property at a lower value, then you are entitled to hold on to the buyer’s deposit (through your real estate agent) and relist the property for sale. As stated above, you will look to the deposit in a Court claim for any damages you sustain and may pursue the buyers for any shortfall over and above the deposit.
It is for all of the above reasons that it is crucial in particular for sellers to ensure that there is a sufficient deposit on a real estate transaction. We typically suggest no less than 10% of the purchase price.
Acquiring legal help
The best way to avoid any unnecessary complications or missteps is to acquire a Real Estate lawyer who can resolve any questions or issues you may encounter. This help should be received prior to signing the Offer! Having a legal representative like Epstein & Associates working on your behalf can help you avoid making mistakes that could potentially cost you thousands of dollars and consultations with our lawyers are free.