Failing to close on a purchase or sale obviously isn’t anyone’s Plan A, but it does happen. What does Plan B look like?
Some of the reasons that a deal might fall through on closing day include, financing issues, a buyer purchasing a home on the condition that their previous home sold, major issue arises on inspection or pre-close walk through that cannot be resolved.
It is important to remember that an agreement of purchase and sale is a binding contract. There is a reason that there are condition dates for many of the things that may be deal breakers, such as financing, inspection, lawyer review etc. If either of the parties don’t use the condition dates appropriately to investigate these issues they may be putting themselves in a risky position if they then refuse to close as planned for an issue that may have been caught.
What happens after it falls through?
Since the agreement is a contract, the party who is unable to close is in breach of that contract. This means that if a buyer refused to close the seller could file a suit against them, and the would-be buyer may be responsible for not only any costs associated with the delay in selling the house, and any costs associated with completing the agreement (such as agreed repairs). Usually if the property is sold for less, the buyer is also responsible for the difference between the agreed price and the price that the seller ultimately sells the property for.
If a seller refuses to close, they may also be sued for any costs associated with that failed transaction that the buyer incurred.
Make sure you communicate with your professionals. Many capable realtors and real estate lawyers are very adept at finding solutions to prevent deals from falling through on closing day. It is important to keep these people in the loop so they are best able to help you.
If you have any questions about real estate deals that fall through you can call us at (902) 826-3070 or email us at email@example.com to set up a meeting with one of our lawyers at our Tantallon law firm. You can also schedule a no commitment Issue Review Consult for $100+HST where you have the opportunity to explain your situation to a lawyer and get basic advice before deciding whether or not you'd like to retain us.
By: Briana C. O'Grady, J.D. – Associate Lawyer
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