The question of “When is a Deposit a Deposit?” is one of the two most significant ramifications of the risk of transactions collapsing. The second question is whether or not a seller may sue for damage. The two alternatives are not mutually exclusive, and the second option for home sellers is covered in this article.
What property sellers may do when deals fail
Deals fall through for a number of reasons. Due to dropping property values and rising interest rates, transactions are falling apart in today’s market. Consequently, what should a seller do if a real estate transaction collapses? The non-defaulting seller has essentially two options:
Accept the repudiation or breach of contract and file a claim for any damage; or Permit the contract to lapse and retain the deposit.
Options 1 and 2 are not necessarily mutually exclusive.
Damage suits may be filed by homeowners
The seller may seek compensation for any losses incurred as a result of the other party’s violation of contract. If the seller is also withholding the deposit, they may seek damages in excess of the deposit amount. The Court will attempt to place the party in its pre-breech position while determining damages. Frequently, the primary element of damages will be the gap between the property’s value and the contract price.
In estimating the loss, the typical date for determining the property’s worth is the date of the breach of contract. The courts have assessed property value loss using different dates when the breach date is unfair. As in today’s collapsing market, the seller may sell the home for a lesser price, and the buyer who didn’t follow through will be held liable.
Other losses and expenses that may be considered by the court for computing damages are those incurred by the seller, which may include: closing costs incurred for the failed sale; relocation and storage costs, additional property or rental charges; interest; and professional fees owed or lost as a result of the breach. In the event of a failed purchase, a realtor’s commission may be included in damages.
When considering litigation, a non-defaulting seller must offset or minimize his losses and may need to actively sell the property. If the Court deems that the seller hasn’t reduced its losses, the seller may not receive full indemnification.greatest
Obtain Reliable Legal Counsel
Regardless of the specifics of your case, knowing what to do in the aftermath of a failed transaction and navigating the court system can be challenging.
Engaging a real estate lawyer early on is the best approach to protecting yourself when a deal falls through. Access our will questionnaire by clicking here and becoming acquainted with the data we need to get your affairs in order.