Eagle, ID asked in Contracts and Real Estate Law for Idaho

Q: We are in contract to sell our house, based on our contingency can we walk away with no fees?

We have a contingency that says, "The sale is contingent upon the seller entering into a contract to purchase a replacement property within 15 calendar days." This was on 10/31/22. Our agent is now saying we must terminate and pay 3% to seller and 3% to buyer. However, isn't this why we had a contingency? If we can't enter into a contract that would mean this contract is void after the 15th day? She's threatening litigation from the buyer if we don't ask for more time or cancel the contract. We have put offers in and none accepted, and we've seen plenty of homes, we also have a loan lined up. We don't want to be pressured into buying just because we have a contract, but again isn't that why we have the wording? Our agent and broker say we must cancel and pay the fees. Wouldn't that be void after the timeframe? and no fees due? I can provide more info if needed.

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1 Lawyer Answer

A: Your agent appears to be relying on a listing agreement that calls for her to be paid her commission even if the buyer she found is precluded from closing due to the contingency in the purchase contract. So there are two different contracts at issue. One is the "listing agreement" with your agent. The other is the sale contract with your buyer. Your buyer cannot compel you to perform (cannot compel "specific performance") because of the non-happening of the contingency. It is reasonable to conclude that the "contingency" was a "condition precedent" to either party's obligation to perform. Upon the non-happening of the contingency, both parties are excused from further performance. Had you not made a good faith effort to obtain a replacement property you would not be able to take advantage of the non-happening of the condition (a party cannot benefit from his or her own non-feasance where that party was required to act). But, because you can affiance or otherwise establish, as necessary, your good faith efforts to find a replacement property, you cannot be penalized for the inability to obtain the replacement. You should instruct the person who is holding the earnest money to return it, in full, to the would-be buyer of your home.

Vis-a-vis your agent, her right to claim some commission turns on the wording of your listing agreement. I doubt it compels you to pay the buyer's agent (because you are not in contract with the buyer's agent) but you may be on the hook for your listing agent's commission. Speak to him or her about that agent finding another buyer during the term of the listing agreement or other solution short of adjudicating with your own agent.

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