There are times when at no fault of a Buyer, a Seller decides they cannot move forward with the sale of real estate they have contracted to sell. Life happens - sickness, a job falling through or merely remorseful thoughts about selling the property - and as a result, a Seller may choose not to proceed to closing. The ramifications of the Seller’s decision is greatly impacted by whether or not there is a binding contract between the parties and whether the contract has been reduced to writing and signed by all parties.
The Statute of Frauds in North Carolina states in part, “All contracts to sell or convey any lands ... exceeding in duration three years from the making thereof, shall be void unless said contract, or some memorandum or note thereof, be put in writing and signed by the party to be charged therewith, or by some other person by him thereto lawfully authorized.”
Determining the particulars of a sufficient written contract signed by the parities is beyond the scope of our topic. However, it seems that although the parties may proceed under a verbal real estate contract, they may only be obligated to perform if the contract is in writing and properly executed.
Assuming a valid written contract is involved, the financial ramifications for a Seller who decides to walk away from, or breach, a contract could be significant. In the standard North Carolina Real Estate Offer To Purchase and Contract approved by the Real Estate Commission and Bar Association, the remedies available to the Buyer are noted in the terms of the contact.
The standard contract states that in addition to remedies available to a Buyer at law for breach of contract, the Buyer has the right to terminate the contract. And if they choose to terminate, then the Due Diligence Fee and Earnest Money Deposit should be refunded to the buyer. Further, the Buyer may also be entitled to other costs they incurred relating to their Due Diligence efforts such as inspections, surveys, title research fees, and loan expenses.
Another financial consequence a Seller may need to consider before they decide to walk away from a closing is whether they owe third-parties for services they have rendered in connection with the sale of the property. For instance, if the Seller had engaged a realtor in the transaction, the Seller may owe the realtor their commission, marketing, and other reasonable expenses the realtor incurred as a result of bringing them a ready and willing buyer.
For a Seller who is thinking about walking away from a contract, talking with an attorney will enable the Seller to be properly informed and understand the fine print of the contract before making a final decision, which may be prove to be financially beneficial for a Seller’s Remorse.
Published by Wendy Hughes on November 26, 2018.