You are just one day away from closing on your dream home when you get a call from your agent… The seller has just told us they are refusing to sell! AHHHH!!!! What do you do now? My business partner and I are working through this right now. It is not very common, but as always, buyer beware.
Here’s what your options are and a few things you should do.
Still go to closing — We went through the motions and closed (signed paper work and transferred funds) on the buyer’s side of the transaction. That way there is no argument that we did not fulfill our end of the contract. (This is not essential to win your case, it just makes your case much stronger.)
Communicate — You need to keep open communication between you and your agent. This will be a frustrating time, but clear communication is the best way to get through this.
The buyer has three remedies in the Utah state approved real estate purchase contract (REPC) in section 16.1. I am going to explain these in simple terms. Refer to the REPC for the legalese version.
A) Buyer receives their earnest money deposit back as well as an equal amount of money from the seller. That is considered “liquidated damages” and you are done.
B) Buyer leaves earnest money deposit with the brokerage and sues the seller to force them to fulfill the contract, in other words you would make the seller sell the home.
C) Buyer receives their earnest money deposit back and pursues any other remedies the law provides. In other words, you will receive your earnest money back and are going to sue the seller for damages such as inspection costs, appraisal costs, storage cost, etc.
Clear as mud? Here is the kicker. In any of the above remedies provided, you as the buyer are going to need to “lawyer up” unless the seller agrees of their own free will to execute on the agreed remedy. If it ends up in court, the prevailing party is entitled to costs and reasonable attorney fees per section 17 of the REPC.
Now, this is not a common issue. Typically, IF the seller starts to back out, and is presented with the remedies, they proceed with the sale. A good real estate agent should be able to walk you through the whole process. It’s one of many reasons to have professional representation on your side when you buy or sell a property.