When Your Real Estate Deal DOES NOT Close

What do you do when the other side has made it clear that they will not be able to close a real estate deal? What if there are certain obligations that the other party has not or will not fulfill as part of the deal? It is at this point in the transaction where it is important for you to prove that you yourself are, in fact, “ready, willing, and able” to close the transaction and carry out the obligations that you promised to do. In legal terms, lawyers refer to this act as “tendering” on the other party, and it shows that you were not the cause of the deal failing or falling apart. In practical terms, this is done by delivering and presenting all the necessary documents, money, and keys to the other party by the time stipulated in the original Agreement of Purchase and Sale.

But what happens if it is not clear that the other party will be in default of the agreement? More specifically, what happens when you yourself are also in breach of the agreement along with the other party? The first thing that you should determine is if the breach you are complaining about is “express” or “implied”. In other words, are they flat out telling you that they will not be able to close the real estate transaction or is there something in their words or actions that may be hinting towards the fact that they will not be able to fulfil their obligations. To determine if the other party’s behaviour or words can reasonably be considered what is called an “anticipatory breach”, consult with your real estate lawyer and provide the facts and circumstances behind the case.

It is important to note that not all communications or gestures will be seen as proof that a person no longer wants to be bound by the agreement. The breach has to go to what is referred to as the “heart of the contract”. It comes down to convincing a judge whether certain conduct amounts to an outright rejection of the agreement, and that judge will be looking at the conduct in the context of the contract between the parties, including all the conversations that took place leading up to the alleged breach, the emails or correspondence that went back and forth between the parties, and any other circumstances that are applicable. For example, if a purchaser fails to pay a deposit to the seller that is part of the agreement, this obviously amounts to a serious breach of the agreement, but not all cases are black and white. In one case, an email from a real estate agent indicating that his client would not close a real estate purchase did NOT amount to a “repudiation” of the contract, mainly because the lawyers had been involved in negotiating the terms.

So now that it has become clear to you that the other party does not, for example, want to purchase the house that you agreed to sell to them, you have two ways of going about your business. You can accept this fact, terminate the deal, and sue the buyers for any damages you have suffered as a result of their failure to honour their obligations. Alternatively, you can demand that the buyers complete the transaction, but keep in mind that you then have to show that you yourself are still prepared to close the deal as per the terms of the agreement. The latter choice is particularly useful in situations where the other party is bluffing about their reasons for not being able to close. If you choose the former option, you will still have an obligation to “mitigate your damages”, which means that, in our example, you as the seller would have to take steps to relist the property and sell it for as much if not more that the original sale price.
If you would like to have your situation reviewed by a lawyer, do not hesitate to contact us by phone or email.

By |October 3rd, 2018|Real Estate|0 Comments

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