Q: Is it worth pursuing a buyer who defaulted on a residential sale 2 days before closing after removing all contingencies?
Our buyer unexpectedly presented us with a unilateral termination as we were preparing to close.
- we met all deadlines including original closing date
- we agreed to and completed over $5k in repairs (our agent coordinated with the contractor to pay out of proceeds)
- the buyer's funding had been approved
- all parties were scheduled for settlement
- the buyer was invited to inspect the repairs but never did
- four days before closing, the buyers agent notified us that the buyer was considering pulling out of the sale, but added that she didn't have legitimate grounds for it
- two days before closing the buyer sent the unilateral termination
- our contract allowed for an automatic 14 day extension in such an event, but the buyer has cut off all communication with her agent and lender
So far, information found ranges for claiming the deposit to suing for performance and damages. Looking for any additional input that will help determine the best course of action. Thanks.
A: You should get a contract review to determine the damages available under your contract. In some, the damages are limited to the earnest money deposit and moat of that goes to the realtor. In others, you can force performance or collect substantial damages. The contracts are not all the same, and the terms matter.
A: This is a very common situation. Buyers can elect to break a contract. The question is whether there is a penalty. In your situation, you may elect recovery of the EMD or a suit for specific performance. Your contract certainly has mandatory mediation as predicate for a lawsuit for damages, but that mediation is not necessary predicate for specific performance. You must also consider that the broker will claim commission on the enforced sale. This is a rough outline, which can change dependent on the exact language of your various contract documents and written communications.
A: You can claim the deposit, but review the contract terms to confirm you do all that is necessary to do that. Suing the buyer for specific performance is a waste of time and will prevent you from listing and selling your property. Move on and sell the property.
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