Real Estate Law | Make sure you structure your contract to protect your interests
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Dear Mr. Feichthaler:
We recently listed our house and quickly obtained a contract for purchase. Within a few days, the purchaser seemed to have "buyer's remorse" and cancelled the contract. I feel this buyer wasted everyone's time. Do we have any recourse against the buyer, and can we keep their $1,000 escrow deposit?
Sandra M.
Dear Sandra:
I often write about the vital importance of the contract in determining rights and obligations, and your situation will be no exception. First, finding a good buyer of a house is not as simple as it may seem. As seller, everything possible should be done to confirm the buyer is a legitimate one. I frequently receive contracts with investors as buyers. Depending on how the contract is worded, the buyers may have the right to transfer, or "flip" the contract or property to another buyer, sometimes many weeks, or even months, into the future. My general advice to any seller is to limit the amount of inspection time, or due diligence, so that the buyer cannot hold up the property for a lengthy period of time. Typically, 14 days is more than sufficient to give the buyer comfort in what she or he is buying. During that inspection period, most contracts provide the buyer can cancel during that time for any reason.
I have also noted in prior answers that a larger escrow deposit tends to be a sign of a successful purchase. If a buyer puts $1,000 down on a $500,000 property, the likelihood of them seeking to flip the contract, or otherwise cancel, is increased. They also are less likely to be able to arrange to send the remaining purchase funds, whether their own cash or financing, to complete the purchase.
Thankfully, in your situation, you note the property was only off the market for a few days. Hopefully, you didn't miss out on a great buyer. Your Realtor should change the status from pending to Back on the Market so other Realtors know it is once again available. As for compensating you or your Realtor for the wasted time, there really are no grounds to pursue this. The nature of real estate results in many transactions not reaching a successful conclusion for a variety of reasons. To mitigate this risk, it is incredibly important to word and structure the contract in a way that protects your interests.
I wish you and all our Cape Coral Neighbors an outstanding Thanksgiving holiday.
Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.