What Happens When a Seller Defaults?
The closing process can be chaotic enough without the added stresses of a breach of contract on the part of the seller. As a homebuyer, you may be wondering about the legal rights with which you are endowed should such an unhappy circumstance result. A buyer’s legal recourse, however, is dependent on the terms set forth in the contract. What follows is a list of reasons why a seller might default and what options are available to the buyer.
Valid Reasons for Seller Breach of Contract
Sellers may legitimately default on the contract in the event that home repairs, inspections and other requirements cannot be satisfactorily completed. As long as there are no clauses stating that the seller is responsible for these and similar issues, he or she may invalidate the contract on the grounds of irreconcilable contingencies. Contract damages can be claimed in the event that, for example, the purchase price is much lower than that of a neighboring home that has been appraised at a value equal to or lesser than that of the property in question. For more information, visit Marina Title’s Buyers and Sellers page.
In the case of there being more than one settler, the default of a sale can result from such events as the property being sold by the heirs to the estate or the dissolution of a marriage. Should even one of these sellers not agree to the terms, the sale will be rendered null and void. The original seller may then, without fear of legal repercussions, withdraw from the contract. Aside from various personal reasons a purchaser may want to back out of the transaction, which are rarely deemed valid by the state, the sale of a home may be contingent on the seller’s acquisition of a new, separate piece of property. If so, should the seller fail to acquire said property, he or she may withdraw from the contract.
The Buyer’s Legal Recourse
In the event that contacting the lender, broker, settlement agent and other relevant parties should result in a breakdown of communication, the buyer should consult a qualified attorney. Reviewing your contract for contingency clauses, dispute resolution clauses or remedies for default should be the very first action a buyer takes should he or she suspect that the seller cancelled a transaction illegitimately. If the purchase contract proves too vague or does not include the appropriate language, a real estate attorney may be able to file a lawsuit for damages both monetary and punitive, depending on the degree of fraud or deceit engaged in by the seller.
Additionally, the buyer may sue for “specific performance,” a term which affixes upon the property the labels of “unique” and “specific,” the end result being that the sale is court-enforced. To ensure the full protection of their rights, buyers should always review their contracts for any language specifying how disputes must be resolved, whether through arbitration, mediation, small claims court or other venues.
The above list is far from exhaustive, and there are many more aspects to consider if a seller should default. The professionals at Marina Title offer their expert knowledge in answering any questions you might have pertaining to purchase contracts, title insurance and many other matters governing Florida real estate. Contact us by email at [email protected], or by phone at (305) 901-5628.
