Can A Buyer Or Seller Of Property Cancel After Signing A Purchase Agreement
In certain situations, a buyer or seller can cancel an agreement to buy or sell a property after signing a purchase agreement. If there is a breach by the other party, the nonbreaching party may have the right to cancel the deal or sue to make the other party perform or pay damages for not performing. Another example is when a buyer investigates a property and decides that it requires too many repairs. In most purchase contracts, the buyer generally has the right to cancel and keep their deposit.
In the case of a commercial property, a buyer might discover that zoning laws in the city or county where the property is located won’t allow them to use the property in the manner they intend. Again, it’s very important to have experienced representation. As a deal gets more complex, such as commercial transactions involving multi-family, office, or industrial properties, you might need a team of professionals such as an attorney, real estate broker, land use expert, architect and accountant. These professionals can make sure you’re receiving all of the benefits you bargained for and are maximizing the value of the property.
What Are The Steps In Resolving A Dispute Between A Buyer And Seller?
In the real estate context, many contracts provide that if a buyer doesn’t perform, the seller can keep the buyer’s deposit. This provision is called a liquidated damage clause. In many real estate contracts, a liquidated damage clause is the only remedy. It basically provides that if the buyer doesn’t perform, the seller retains the deposit and can cancel the contract but receive no other damages.
If a seller defaults, a buyer can often sue to have the contract enforced to secure title to the property. This remedy is called specific performance. It’s available in real estate cases because real estate is considered unique under the law given that money damages may not adequately compensate the buyer. For example, if you want to purchase a specific house but the seller defaults and won’t voluntarily transfer title, money damages won’t be enough if you fell in love with the seller’s property. You want to live there. You want to raise your family in that house. That is why real estate is considered unique and is why, under certain circumstances, a court will order a seller to perform as required under the contract.
Sometimes things are not black and white. For example, perhaps the seller didn’t disclose certain things or otherwise act honestly. Therefore, the buyer might dispute that their deposit should be forfeited. When situations are not black and white, disputes are much more likely to wind up in court or arbitration. However, a well-drafted contract is much less likely to be the subject of litigation. In almost all cases, a well-drafted contract will save you substantial sums versus lengthy and time-consuming litigation.
When our clients come to us with a problem, we look at the pros and cons of different courses of action. Is it better to sue first or negotiate? Do we want to just walk away? We’ll look at all of the options available and recommend what we believe to be the best course of action.