Tag: real estate contracts

Buyer jilted at the Alter… the closing alter that is

 

I know it is not quite as earth shattering as being left at the wedding alter but it can be quite complicated and feelings and bank accounts are hurt all the same. If you read my blog you know that I try to talk about things that are happening in our office or at least in our Real Estate community so I can get it off my chest…… but also as a way to hear from wiser more amazing agents and people out there.

I was just involved with a deal where the buyer had performed all of his duties, his money is ready, inspections are done and in spite of low appraisal the buyer is ready to follow through with his nuptials and low and behold the seller gets cold feet. The seller hinted that he had lost that loving feeling and afraid of following through but even though all indicators were that he would be honorable… it was not to be.

So what in the world is the buyer to do? Does he have any remedies to at least get his money that he is out much less not being able to find a home comparable to the home that got away. It is very difficult in Florida to make a person sell his home if he does not wish to even if he is contractually obligated. That one is hard to believe!!! But the seller can sue in certain circumstances for Specific Performance.

To obtain specific performance, the purchaser must show that he or she was ready and able to perform at the closing. Specific performance may be granted where there is reasonable certainty as to what was intended in the contract and the meaning of the contract, taken as a whole, is understandable to the court. In order for a contract to be subject to specific performance, the contract must reflect that the obligations of the parties with respect to conditions of the contract and actions to be taken by the parties are clear, definite and certain. If the agreement is definite in all of its essential elements, specific performance can be granted.

“Essential elements” of the contract typically would be the purchase price, deposit amount, down payment amount, legal description of the property, financing terms, closing date and effective time period of the contract. It also could include an inventory of property on the premises that is to be included with the real property, specific conditions for sale, assignment of the contract to a third-party and terms for refinancing, particularly where the seller is holding the mortgage.

If the buyer seeks specific performance, he or she must remain ready to perform his or her obligations under the contract while the lawsuit is pending. Specific performance involves problems of proving contract certainty and reasonableness that are not involved in a lawsuit for damages.

It is also possible that the buyer could seek damages for the money that they spent to acquire the home such as inspections, appraisal and loan processing to name a few. With all the talk about repercussion what about the earned sales commission? (We will play with that one next week)

AS I have warned before I am not an attorney and I do not play one of TV or in the press so please consult an attorney if you find yourself in this precarious position. Thankfully this does not happen often but when it does keep a cool head, contact an attorney and weigh your options.

I would love to hear from my fellow agents and others that may have found themselves in this circumstance. Please change the names to protect the innocent and the NOT so innocent. Until next week, Please remember that, “The only people we have to get even with are those that have helped us”

Contingencies, Love 'em or Hate 'em

All you sweet Beach show followers know that ALL of my articles come from Real life problems or challenges that happen during my week; I conduct a therapy session by bringing them before you. So thanks for listening. So many things have already come up this week with 2 short sales buyer back outs after 5 months, one going into foreclosure and lending and appraisal issues. . . where do we start? Although all that needs some reflection I had another issue that came up this week and I think many people are not aware of how some of the contingency issues work in Florida. So lets talk a little about common Purchase Contract Contingencies that a buyer may utilize.

I have a sell going on and we are waiting on an appraisal and holding our breaths to make sure it flies and the question was. . . What if it does not appraise? Does the buyer have to buy it? For the most part the answer is NO. Unless the buyer states that the offer is cash and does not put an appraisal contingency in the contract, then failure of property to appraise is an acceptable back out of a contract. The bank will require an appraisal by a third party that has no interest in the sale to determine the property value. There was a time in the distant past that a buyer would just come to the table with some extra cash to buy that dream hacienda. Not saying that NEVER happens but do not count on it. Many cash offers today include an appraisal clause in the contract.

Another common contingency is the inspection period which varies from state to state and can be explicitly stated in the contract. If the sale is an AS IS with right to inspect then the buyer can get an inspection and at his sole discretion get out of the contract if he does not like the findings of the inspection. If a buyer has a regular contact such as FAR 9 then the seller is required to fix any warranted or safety items. The seller and the buyer will discuss and come to terms with how that is handled. But for clarification sake it is the duty of the seller to have those items fixed by a licensed professional and may be required to have a re-inspection before close.

Federal law also gives a buyer 10 days to inspect for lead paint. Don’t run for the hills this will only apply to older homes but again ask your trusted Realtor. We will talk about Chinese Dry Wall another time!!!

Lender approval is another facet of contingencies embedded in the contract unless waved, and even though a customer has a pre-approval letter that does not mean that he has the loan locked in. Any number of things can happen and sometimes do so if a buyer can not attain a loan he has a suitable back out of a contract. A perfect example as happened in one of my deals today was a buyer who lost their job before the property went to close. She now no longer qualifies for her loan so was able to legitimately get out of her contract and have her earnest money returned.

I have heard in the past contingencies called weasel clauses because they allowed a person to weasel out of a contract. That does sound kind of slimy but the fact is contingencies are a necessary part of the Real Estate transaction, and your Realtor can explain all of these to you. Remember I am not a lawyer and I do not even play one on TV so this is meant to be a basic intro to contingencies as they relate to a typical sale in Florida. Thanks for being my therapist one more time.