For most people, the most important purchase they will ever make is the purchase of their home. It is the place of lasting memories of your spouse, your children, parties, neighbors, and is the place most people spend a majority of their life. It is often a good financial investment. It is also the biggest expense for most people on a monthly basis. In these uncertain times, it can be a huge burden, both financially and emotionally.
Typically, when people buy a house, they enter into a contract, intending to settle on the property 30 to 60 days later. These 30 to 60 days provide adequate time to ensure financing is together, obtain appraisals of the property, have a licensed inspector inspect the property, and make repairs to the property.
Given the COVID-19 virus and the economic uncertainty it has caused, many buyers who entered a contract now are getting “cold feet.” They may have lost their jobs or feel that their job is uncertain over the long term; they may be concerned that the housing market may collapse, causing the property to be underwater. These buyers may want to get out of these contracts without going to settlement.
On the other hand, a seller may have their buyer walk away at the last minute, causing retirements to be delayed, a new move to be cancelled, and a loss of positive cash flow. These sellers may also want to be out of the house before the effect of the economy really shakes the housing market.
Generally speaking, contracts to buy and sell a house include several contingencies. These contingencies are too numerous to list, but the two contingencies that you see most often are the financing contingency, and the inspection contingency. With the financing contingency, the buyer is required to attempt in good faith to obtain financing, within certain timeframes laid out in the contract. If they are unable to obtain that financing, they can typically get out of the contract without penalty. Likewise, for most inspection contingencies, the buyer can provide the inspection to the seller and require that the seller make certain repairs to the home. If the seller fails to make these repairs, the buyer can typically get out without penalty. Each contract is different however, so an attorney should review the contract with you.
Yet, what happens if the financing is approved, and the repairs are made? The general answer is that the buyer must go through with settlement or they run a real risk of a lawsuit. Many buyers think that they can simply forfeit the deposit they made, which is typically in the $1,000 to $5,000 range, and walk away. Buyers cannot simply do that without being worried about a lawsuit.
If a buyer breaches the contract by failing to go to settlement, they may be liable for the following damages, among others:
- Decrease in sale price of the property.
- Additional interest paid by the seller.
- Loss of an interest rate lock for the purchase of a new home.
- Property taxes and insurance paid.
Towson Real Estate Lawyers at Huesman, Jones & Miles, LLC Help Clients with Contract Concerns
If you are a buyer and breached a contract for the sale of a home, or wish to do so, a Towson real estate lawyer at Huesman, Jones & Miles, LLC can limit your exposure to future lawsuits from the seller. Likewise, if you are a seller who had a buyer refuse to go to settlement for no good reason, we will review your case to see what damages you may be entitled. Call us at 443-589-0150 or contact us online for a free consultation.
Located in Hunt Valley and Towson, Maryland, we serve clients throughout Baltimore, Baltimore County, Bel Air, Bentley Springs, Columbia, Freeland, Hereford, Hampton, Westminster, Essex, Monkton, Sparks Glencoe, Parkton, Phoenix, Pikesville, White Hall, Carroll County, Harford County, and Howard County.