Real Estate Deal From Falling Through
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Disclaimer: This article on your real estate deal is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
You’ve sold your house! You’re packing up and getting ready to move. But then, seemingly out of nowhere, it looks like the deal may not actually go through.
Or perhaps partway through the transaction, an issue arises that needs to be addressed before the deal can be finalized. Regardless of the circumstances, it’s important to know your rights. It’s important to know how to protect yourself when a real estate transaction goes off the rails.
In this article, we will discuss why a deal may suddenly be on shaky ground. Then we will outline what your options are if that is the case. We always welcome you to book a complimentary consultation with our team to discuss your situation in greater detail.
Why might a real estate purchase or sale not close?
First of all, you cannot back out of a real estate deal because you have changed your mind. You signed a legally binding contract and the other party has the right to sue you for breach of contract.
There are a few reasons why a transaction may fall through or fail to close on the closing date. Here are just some that our office have come across.
The buyer has trouble obtaining financing
This was relatively common when the market had cooled. The offer price and the house’s value to the bank were no longer equal. The bank would no longer provide financing for the offer price. Therefore, the buyer had to come up with the difference or the deal was lost.
The buyer may have initially been able to qualify for a loan. However, since then, their credit rating changed or their income dropped. The bank could no longer support the loan and the purchase had to be cancelled.
The title search reveals problems
The title search on a property looks at the history of ownership. A title search may reveal that someone has made a claim to the property. It may reveal liens that haven’t been cleared up. If there are these or other issues with the title, it can be difficult to close on the closing date.
The house inspection reveals problems with the home
A home inspection can reveal previously unknown issues such as mold, structural problems or other defects.
How to save a deal that is on the rocks
First and foremost, you want to seek legal advice as soon as possible with any real estate transaction. Your lawyer can provide legal advice and strategies to salvage a deal that is in danger of not closing. She can also make sure to document your file while things are going well. This way, you have all of the evidence on your side if matters do not go as planned.
You have a few options that you can pursue to resolve your issues.
Extend the closing date
If your matter can be resolved within a short amount of time, you can ask the seller to extend the closing date. This gives you time to make sure all of your documents are in order and that any outstanding issues are resolved.
Consider a vendor take-back mortgage
If you are having trouble getting financing, you may consider a vendor take-back mortgage. This is where the seller agrees to provide secondary financing for part of the purchase price.
Negotiate an abatement
If the issue is with the condition of the property or something on title, you can negotiate an abatement. This is when the seller agrees to reduce the purchase price of the home in order to account for any outstanding issues or repairs that need to be done.
In the worst-case scenario, if negotiations and attempts to resolve the issue have failed, you may need to pursue litigation. This is the last resort, as it can be costly and time-consuming. It is also important to remember that any legal action taken must be within the confines of the contract entered into between buyer and seller.
Of course, you’ll be in a better position to pursue litigation if you have been working with a real estate lawyer who is well-versed in both the transactional and litigation aspects of real estate law (like Beeksma Law!).
It is important to remember that there are options available to you if a real estate purchase or sale does not close on the closing date. However, it is always advisable to seek legal counsel so that you can make sure all of your bases are covered and any potential issues can be dealt with in an efficient manner.
What happens to the deposit if the deal falls through?
This is a question that we get fairly often when a deal looks like it may not proceed. The answer is…it depends.
There is no guarantee that it will be given to the seller. It will depend on the language that is used in your purchase agreement. It will also depend on the actual damages suffered by the seller.
For example, if the deal falls through and the seller is able to find a new buyer at the same price and terms, then the seller may not be entitled to keep your deposit. However, if the seller cannot find a new buyer or must accept less money for their property, they may be eligible to receive damages from the buyer in the form of your deposit.
Smoother Real Estate Transactions with Beeksma Law
The last thing that anyone wants is a stressful, drawn-out dispute over a real estate transaction. At Beeksma Law, we are here to help make sure that we close your deals and if it doesn’t, then you have the best chance of recovering any damages that may be owed.
Our team is highly experienced in both real estate transactions and litigation so we can assist you no matter what stage your deal is at.
If you have any questions or would like to speak with a real estate lawyer regarding a potential transaction, please don’t hesitate to contact us today! Let us help make your real estate transactions smoother and stress-free!