Selling my home

[Alana]

We have our house currently listed for sale with Remax in Mission Viejo California. My husband and I accepted an offer on Wednesday, November 22,2000. We have copies of our signed sales contract between both the buyer and us. My husband and I are relocating to Pennsylvania which is identified on the multi-listing. Due to the buyer wanting a 10 business day escrow, we immediately proceeded to making our moving arrangements relating to the relocation, meaning: we have purchased non-refundable, non-exchangeable airline tickets for $650, we have 75% of our house packed up, scheduled the moving company for 12/8/00 binding us for $5700 if signed today (11/27/00), have sold sign up in the yard losing potential buyers, we have arranged the shipping of our cars and scheduled utility shut offs. Also lost our continguency buyer due to giving them a 24 hour notice to proceed with their deal or they would lose the house.

We have been informed by our agent that he is aware that the buyer is having some remorse about the deal and may back out. It is now the 5th day after signing the agreement and we have not heard that the buyer is officially backing out but is still very likely.

The buyer gave us a 10 business day escrow along with only having 2 days to get out after close of escrow. We had to start our moving arrangements to accomodate this buyer. According to California real estate law, can this buyer back out of this agreement after 5 days and us losing all that money, our contingency buyer and the whole deal just because they changed their minds???? Do we have any recourse legally???

 

[HomeGuru]

Were all the contingencies removed? Even if you have a signed contract by both parties that does not mean it is a done deal. What if the Buyer could not qualify for the loan, did not have the stated downpayment, did not accept the results of the termite and home inspection, did not approve the Seller Real Property Disclosure Statement, preliminary title report, survey etc. I have a feeling that you jumped the gun and that your agent did not fully explain the terms and conditons of the contract with you. There is little chance that all the above could be accomplished within 10 business days.

 

[Alana]

True Answer

After reading your reply, you still did not answer my question.

Regardless whether or not you feel that an escrow will take more than 10 days, that is the situation that we are in today. I need to know that given the information I provided to you previously, can a buyer back out of a contract just because they have changed their minds before any of the contingencies were addressed???

If so, how is it right for people to be able to put an offer on a house and take it back just because. What protects a seller?? I was planning on giving notice to my employee today, if the buyer justs backs out for no good reason, then I just lose my job?? Is this right???

 

[HomeGuru]

Alana, you sound like an attorney talking to an expert witness at a real estate litigation trial. I think that's so cute.

Given the information provided to me, I have not the foggiest idear. Why? Because I do not have the liberty of reading the contract, thus do not know what the terms and conditions are.

I am willing to bet that the contract was written in such a way that the Buyer could cancel the contract for various reasons. We in the real estate industry call these the Buyer "escape" or "weasel" clauses. You need to get less emotional, calm down and have a heart-to-heart and/or knockdown dragout talk with your real estate agent. Toss the bitter feelings aside and understand the contract language and legal ramifications. If you do not understand fully the Buyer's and your legal obligations with respect to the contract and transaction, you will always be angry without knowing why.

 

[Alana]

Found an answer

Well, I guess that you were not able to give me an answer to my question again. I spoke to a real estate attorney yesterday and he did inform me that in California it is extremely easy for a buyer to back out of a contract. Personally, I think that is so unfair to a seller and if I had the time, I would lobby against just that. Anyway, he also informed me that if I would choose to pursue legal action against this buyer, I would probably win the $10,000 hand money but it would tie up my house and would probably take a year to settle and it would cost more than the $10,000 when all is said and done. So that pretty much answered my question.

As far as your question regarding my understanding of the terms in the contract, yes, I do understand the terms. I happened to be licensed as a Real Estate Salesperson in the state of Pennsylvania. I have also been employed as a property management accountant for the last 12 years. I needed to know if a buyer could back out using the reason of "I changed my mind" rather than any of the contingencies in the contract. Each state has different laws and I am not familiar with California.

I always had the understanding when I've been a buyer in the past, that I couldn't just back out of a contract just because it snowed the day after we signed it. What's the point of signing a contract if it's truly not binding??

 

[HomeGuru]

You have missed the point. The issues were based on the terms and conditions of your specific sales contract. Especially, you being a real estate agent should certainly know how to read a contract. You do not need to know CA laws. Read your last sentence.
As you know, contracts are binding, but real estate contracts have contingencies.

 

[Alana]

After reading your last sentence, would you please tell me what contingency did my buyer use when he backed out of the contract by changing his mind?? It never even got to that point of addressing any of the contingencies!!!!