Buyer Default on Contract Day of Closing.Can I Keep Down Pymt without Going to Court?

Question

On the day of closing, the buyer decided they want to back out of the contract for no substantiated reason.  The buyer wants their $50K downpayment back. My attorney is advising that I take $10K out of the $50K down payment then re-list the house. I'm pissed. I feel like I should be able to keep all the downpayment. My attorney says we would probably need to go to court which could take years and a lot of money. I've never sold a house before. Please advise. Should I take the $10K or fight it in court?

Russell Brazil · Answer

Read your contract. Often they say 2 things...you can accept the Deposit (not down payment) as liquidated damages. Or you can sue for damages. You wont know what your damages are until you sell. And as youve said you may be able to relist at a higher price...so you might not actually incur any damages.

Delicia M. · Answer

@Mohammed Rahman everyone’s advise has been consistent. That’s what I needed because I was seriously questioning my attorneys advise. The 2 family property is located in Queens, NY.

Chris Seveney · Answer

@Delicia M.

Offer them that you keep $25k and see what they say, can always negotiate down

Mohammed Rahman · Answer

@Delicia M. - when you initially signed the contract, did the buyer put any % specifically for contract signing? That would be funds I would imagine you can retain.

Where in Queens is the property btw?

For example, as a broker whenever I submit offers with my buyers I'm making a distinguishment between monies for down payment and monies for contract signing.

Contract signing % is eventually applied towards down payment and/or closing costs, but thats the amount the buyer could lose out on should they decide to withdraw for whatever reason during fully executed contract process (assuming they don't have a contingency in place to protect them, for example a financing contingency).

Sent you a DM - would be great to throw my hat in the ring for you to interview for listing agents. I grew up in Queens.

Mohammed Rahman · Answer

Hey @Delicia M. - as others have mentioned, you could hypothetically try to go after the full $50k if it was meant as earnest money deposit but even then the legal chase might not be worth it.

Better to take the highroad, take the amount that you deserve due to buyer's inability to meet their end of the contract, and move on.

Where's the property located? I'll shoot you a DM.

Melissa Hartvigsen · Answer

@Delicia M.:

You are welcome! Best wishes for the re-listing! 😊

Delicia M. · Answer

@Wayne Brooks no earnest money, just $50K down payment payable to Escrowee upon signing the contract.

Delicia M. · Answer

@Chris Seveney, I sent an email to my attorney and ask that he start high ($25K+) and let them negotiate down. Thank you. @Russell Brazil, my contract says "If Purchaser* defaults hereunder, Seller’s sole remedy shall be to receive and retain the Downpayment as liquidated damages, it being agreed that Seller’s damages in case of Purchaser’s *default might be impossible to ascertain and that the Downpayment constitutes a fair and reasonable amount of damages under the circumstances and is not a penalty."  Although my attorney has advised that the purchaser don't want to lose all their deposit and any deposit less than $50K is not worth it, I feel that I'm still entitled to it and they should take me to court to prove otherwise.

Delicia M. · Answer

@Melissa Hartvigsen I’m frustrated but, I think you’re right. I also think I can re-list for a slightly higher amount. I’ll lick my wounds and move on. Thank you.

Buyer Default on Contract Day of Closing.Can I Keep Down Pymt without Going to Court?

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