What happens when seller backs out of or defaults on contract to sell real estate?
Transcript:
Attorney Tom Olsen: We see more and more sellers who are trying to default under their contract to sell. They've changed their mind. They no longer want to sell the property. They want to back out of the contract. We're a medium-sized law firm here in Orlando area. We got our finger on the pulse of things going on. Now we've seen this happening more and more where sellers are simply throwing up their hands saying, "Guess what? I've changed my mind. I don't want to sell my property anymore." It's pretty easy for you and me to guess why they don't want to sell it.
Attorney Chris Merrill: They have a better offer.
Attorney Tom Olsen: No doubt about it. What we say to people is from a buyer, first of all, we need to see that contract. We want to make sure from a buyer's perspective that all the Ts have been crossed and the Is have been dotted, everything looks perfect. Then the buyer, in that situation, does have a great remedy. That great, great remedy is provided right there within the far bar contract and is a suit for specific performance wherein the court will order that the seller sell the property to the buyer and the court will order that the seller pay the buyer's attorney's fees.
Attorney Chris Merrill: That's a great provision.
Attorney Tom Olsen: It's a great provision. You may say, "Hey, based on that, why would a seller even try and attempt this? Realistically, occasionally, the seller does get away with it. Why? The buyer is saying, "Attorney Tom Olson told me I'm right 100% guaranteed, no ifs and buts, but I'm not waiting around for a year to let this thing go to court and get a court order. I'm busy. I need to buy something now. The seller's absolutely wrong, but I'm based on taking a year or more to get it through court. I got to move on and find another house."
Attorney Chris Merrill: That's the issue. The problem is the time aspect.
Attorney Tom Olsen: Exactly. People, they often watch TV shows about court actions and they seem like they happen within 24 hours. Man, these days, it's always been a slow process, but things are even slower with COVID.
Attorney Chris Merrill: Exactly. Where you're right that the buyer has a legal remedy and that legal remedy is well-established, but the problem is the legal remedy will take time. Often in many situations, I know not all, but what you're saying is the buyers don't have the luxury of time.
Attorney Tom Olsen: Exactly. If we were representing a seller and they said, "Tom, I'm going to try this strategy. I don't have a legal basis to get out of this contract, but I'm going to do it and see what happens." I'd say, "Okay, fine. Tell the buyers you're not selling. Tell the buyers you've changed your mind. We can always reevaluate if we hear from the buyer's attorney threatening to sue for a suit for partition. We'll throw up our hands and say, "Okay, we'll sell." Then again, buyers might just say, "Okay, we're moving on to the next house." It can be a legitimate strategy.
