Posted by genieSABRE on Mar 4, 2012
What’s The Law When Home Buyer Or Seller Changes His Mind?

What’s The Law When Home Buyer Or Seller Changes His Mind?

Source: Hannif Highclass
Publish:MY BLOG: Toronto Real Estate: March 03, 2012

 

If a home buyer makes an offer on a house,are they bound to it?

If a home seller accepts an offer, can he change his mind?

The Binding Effect of Offers and Acceptances are different for the Buyer & Seller. AND the breach is dependent on Time-Line it took place.

(A) Buyer submits offer – Seller not yet accepted offer

BUYER:  can withdraw an offer at any time until the offer is accepted by the home seller.
Alternatively, If the home buyer makes an offer and the seller responds with different terms than the offer (called a counter offer), there is no contract because the parties have not agreed to the same terms. Until the parties have agreed upon the same terms of the desired purchase and sale in writing, no legal and binding contract exists.

SELLER:  has no recourse at all. No Deal

(B) Buyer submits offer – Seller accepted offer

Once the offer is accepted by the seller – the contract often binds both parties so no one can change their mind without the consent of the other party.
The effect of a breach after the initially acceptance is depended on the time line (c) or (d)

Terms of Listing Agreements: typically contingencies for the benefit of the Buyer. The 2 main one being.

  • •Financing Clause: to ensure that all financing is in order before close of escrow.
  • •Inspection Clause: Inspection of the home by a licensed home inspector to ascertain the structural integrity of the home

When a potential home buyer makes an offer based mostly on a certain price and closing date – he or she should also place contingencies into effect that must be waived in writing by the home buyer in order for the sale to go through.

(C) Offer Accepted but contingencies not waived

BUYER:  is not contractually obligated to complete the purchase of the home.
The deal is basically dead. Note, the buyer has the control over the transaction, assuming there are required written contingencies that the buyer must waive in writing for the sale to close.

SELLER:  Bad luck – better luck next time. Important is that there is no real estate commission paid since the deal did not finalize.

(D) Offer Accepted and contingencies waived

BUYER BREACHES: 
•Seller can release the buyer from the contract’s obligation, but demands to keep the deposit money or some part of it.
•Seller can in some cases go after the buyer – if the property is sold to a 3rd. party at a lower price then what he got from the 1st buyer.
•Seller can recover the cost of that commission paid to the broker

“COMMISSION OWED may depend on the wording of the listing agreement, so it might be wise for the seller to state that the commission will be paid upon completion of the sale of the property.

SELLER BREACHES:
•Buyer can either agree to voluntarily cancel the contract, and get the deposit money back
•Buyer may sue the seller for specific performance. **(see below)
•Seller usually still owes the broker a commission.

“A specific performance action takes place when the buyer records a lis pendens (Latin for litigation pending) on the desired property to let all other interested people that there is litigation pending over the parcel. The buyer then sues the seller for an order by the court that obligates the seller to sell the property to the buyer at the agreed upon price in the written contract.  This mostly happens on commercial properties not so much when a residential home is concerned.”

NOTE:
The decision to withdraw an offer and its consequences can emotionally drain buyers and sellers alike. So if you decide to cancel, it’s a good idea to leave the official steps to your attorney or agent.

 

Need a lawyer? Free Consultation – Call

Sabrina Hussain @ Nanda Law Office

Tel: 905-405-0199

 



 

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One Response to “What’s The Law When Home Buyer Or Seller Changes His Mind?”

  1. Fabiana says:

    the home you want.a0 You could be up against as many as 10 or more other ofrefs.a0 This is where earnest money can make all the difference. The Truth Is To compete in this market you need to be working

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