A real estate transaction is generally expected to flow according to the terms established in the “four corners” of the purchase contract. Expectations of the buyer and seller are clearly established according to the timelines set forth in the contract. Generally speaking things sort of go like this; buyer views property, there’s an offer and acceptance followed by a loan approval, termite inspection, survey and final walk-thru, signing and finally recordation.
Outside the contract, the buyer might ask the seller to clarify terms reflected on the disclosure or for repairs as a result of their inspections. Remember, sellers are not required to make repairs or renegotiate at any time following acceptance. A dissatisfied buyer can cancel without penalty as long as they do so within the contractually established timelines. Otherwise, the buyer is expected to perform according to the terms of the contract.
Buyers generally feel assured (albeit perhaps wrongly so) that no sanction other than the possible forfeiture of an initial earnest money deposit would be imposed even for a default just prior to closing.
Picture this. Buyer has loan approval or even stronger, paying cash. Seller relies on this commitment and begins the closing process. One owner closed their business and relocated to the mainland after the buyer received loan approval. Termite inspections and surveys are ordered. Homes are fumigated, household goods are packed and sold, rental deposits are paid and perhaps the Seller moves forward with another purchase. Moving vans are arranged, temporary lodging is arranged, cleaning services are hired, etc, etc. Buyer and seller sign all closing documents and recordation is set.
Buyer has a sudden change of heart. They begin making new demands or worse, they want to cancel the contract. Even forfeiture of a healthy earnest money deposit may leave the seller with a huge shortfall, not to mention turning the seller’s world entirely upside down.
Certainly, in today’s market, most sellers rely heavily on promises made and contractual commitments. Buyers in default are well advised to consult their attorney who will likely explain that the seller may have other remedies including compensation for costs and damages resulting from the buyer’s breach of contract. Even with a compelling reason for a last minute cancellation, the most compassionate sellers may not be willing or able to forego seeking compensation for last minute broken contractual obligations.
Bottom line is this; buyers are best to beware before breaking their last minute real estate promises!