What Are Your Options If Your Real Estate Deal Goes Sour?

Once a real estate contract is signed, everyone hopes the deal will end with a buyer getting the keys to their beautiful new home and the seller walking away with a profitable check. Occasionally, however, a deal falls apart after the contract is signed. Maybe the buyer’s financing doesn’t come through, or the appraisal comes in lower than the contract price. Or a cloud on the title pops up (indicating that the seller doesn’t have clear rights to the property) that can’t be quickly repaired. Sometimes, either the buyer or the seller simply gets cold feet and wants out.

Real Estate Options

Since a contract is a legal document binding both parties, dealing with the fallout of these situations can be challenging. This is when a lawyer familiar with real estate laws and real estate contracts in South Florida can be important to ensuring that your rights are preserved and that you get what you are legally due.

If you are the seller, and a buyer won’t (or can’t) close:

  1. Sometimes a lawyer with good negotiating skills can bring a buyer back to the deal with a combination of sticks and carrots. Sticks include the realization that they can lose their deposit or perhaps be sued for damages; carrots might include such financial inducements as having some closing costs paid for, or having the seller leave some of the upgraded fixtures they originally planned on taking.
  2. Many contracts give the buyer legitimate reasons they can back out of a deal in a specified time period, such as receiving a poor inspection report during the allotted time, or, in some cases, not getting financing. If the buyer is exercising these options, there is not a lot the seller can do except return the escrow deposit and move on to another buyer. However, if the buyer walks away for reasons beyond those the contract allows, the seller may be entitled to the money in escrow. The escrow agent usually can’t just write you a check, though. Depending on the contract, the dispute will have to be resolved either by mediation, arbitration, court, or in some instances the Florida Real Estate Commission (FREC).
  3. If the contract provides for it, the seller may be able to sue the buyer for “specific performance”—that is, to force the buyer to purchase the home. Or, contract providing, you might be able to sue for money damages, such as the difference between the contracted price and the value of the property at the time the buyer breaches. Because litigation can be time-consuming and expensive, though, the reality is it is often easier to put the home back on the market and quickly move on to finding another buyer.

If you are the buyer, and the seller won’t (or can’t) close:

  1. Work with your Realtor and your attorney to see if there is a course of action beyond a simple, on-time closing that might solve the problem. This might include getting a contract extension (to give the seller time to clear up title, say), closing the sale in escrow (where the proceeds stay with the closing agent/attorney and are not disbursed to the seller until the issues are satisfied), having the closing agent hold back a portion of the money (enough to cover the resolution of the problem), or amending the contract to satisfy the parties and enable the close.
  2. Allow the contract to collapse and, if the seller agrees, have the deposit returned to you. Although you won’t get the property, you’ll be able to quickly move on to finding another wonderful home.
  3. Sue in state court for “specific performance,” that is, to require the seller to honor the contract. Although you may win in the end, buyers must think long and hard before pursuing this route, as court cases are time-consuming and expensive. In addition to performance, a lawsuit can sometimes also ask for damages, such as moving and storage costs during the delay, rental property costs, higher interest rates you incurred if rates went up, and the like.

The possibility that problems like this may arise is one reason I strongly urge both parties in a real estate deal to retain a lawyer throughout the process. A qualified real estate attorney can try to keep a deal together if it is in danger of being killed. If the deal does collapse, the lawyer can help you decide the appropriate actions for you. For more information about real estate deals in South Florida, contact the Law Office of Gary M. Landau by email or call 954-979-6566. Attorney Gary Landau personally returns all calls to him.

 

The Legal Documents You Should Create In the New Year

Legal Forms For The New YearNow that we’ve turned the page to 2017, it’s a good time to assess the legal documents you should have, and update or create the ones you are missing.  While this may not be as sexy or exciting as some other resolutions, it is very important for your family and your finances.

These are the legal documents to consider:

1) Last Will and Testament  

According to a recent online survey, the majority of Americans don’t have a will. This is a mistake for most people; should you unexpectedly pass away, the laws of the state, rather than your own wishes, will determine where your assets go. The new year is a good time to think about who you would want to have your possessions (and, crucially if you have minor children, who you would want to become their guardians) and create a valid will. Even if you have a will, you should dust it off every few years to be sure it still reflects your desires (and, if you’ve moved from a different state to Florida, that it conforms with Florida law). Updating an old but valid will can be done with an attachment known as a “codicil.”

2) Living Will

Most of us have ideas of what kind of treatment we want at the end of our lives, but often we don’t share that information until it’s too late. A living will (not to be confused with a will–see my Blog on the misconceptions) tells your physician whether you want aggressive end-of-life care or life support if you are unable to convey those wishes. Don’t think because you’re young you don’t need this; tragic accidents can happen to anyone.

3) Healthcare Power of Attorney

Doctors typically turn to a spouse or, if you’re not married, a living parent, to make important medical decisions should you become incapacitated. Allow you to have surgery? Go on certain powerful drugs? A healthcare power of attorney appoints the person you want for that role. You’ll want someone who keeps their cool under pressure, because important decision will fall to that person during a crisis.

4) Durable Power of Attorney

This document gives someone else the power to make major financial decisions for you, from paying your bills to, in some cases, selling  your home. Before 2011, attorneys could create a power of attorney that was “springing”–that is, that could be used only if you became incapacitated. Since then, however, powers of attorney are deemed to be in effect as soon as they are created. This is why it’s crucial that you choose someone you deeply trust. If you already have a medical condition that prevents you from managing your finances, create this document and give it to the person you are naming as agent so it can immediately be put into use. Another option, if you’re not quite ready, is to create the document but keep all copies under wraps until you want to give the agent your financial power.

Contact the Law Office of Gary M. Landau by email or call 954-979- 6566 to learn more about which documents you may need. Attorney Gary Landau personally returns all calls to him.

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