Hello all. I'm writing this post because we recently put a property under contract with earnest money down. The seller calls me today and tells me a total BS excuse on why he is backing out of the deal. He says he hasn't deposited the Check and wants to give it back. I would be fine with this, but I have my people to pay for executing the contracts, and doing due diligence on the property. Also, I put in a lot of time and effort to make this deal possible. This is the first time this has happened and would like some advice. Thank you very much!
I'm not a lawyer, so there may be more options than I'm aware of...but...
Unless you're willing to sue for non-performance, I'm not sure you have much recourse. That said, use the threat of a potential lawsuit to your advantage, and try to get the seller to reimburse you for any expenses you've incurred.
In addition, if you have an agent, that agent may be able to sue in order to collect their commission from the seller.
Just some thoughts...again, not an attorney so there may be more options...
I have had this happen several times... my solution is simple.
If they don't go through with the executed contract (that fact that they accepted the check and didn't cash it doesn't mean much) tell them that they have three options...
Option 1 -- is to continue down the path and sell the property to you as agreed to in the contract,
Option 2 -- they can buy you out of the contract for a price determined by you based on your expenses and a reasonable profit for you time (my best payout in a situation like this was $5K)... or
Option 3 -- you will record the contract against the deed and cloud the title until they agree to either options 1 or 2.
Best of luck!
Even if the contract is recorded it would expire, so wouldn't a title company just dismiss it and not see it as a cloud?
What if the shoe is on the other foot?
The contract is agreed to, signed and delivered and the earnest money goes to the title company for holding.
The buyer does not like the financing that we would get from a commercial lender and the residential appraisal of the property(2 side by side quads) was a joke, about half of the agreed upon selling price.
What recourse would the seller have at receiving the earnest money if the buyer backs out?
If there's a financing contingency and it's deadline has not passed, you have to give the earnest money back. No financing contingency or it has expired, you keep the EM.
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