My husband and I have sold our home. We are waiting for the buyers' paperwork to be approved so we can go to settlement. However, after looking at the high cost of homes today, we have changed our minds and do not wish to give up our home at this time. Is there any possible way that we can get out of this with no (or little) hassle? Please help!
Unfortunately, you have signed a contract and, assuming it is a binding, legal document, you are obligated to follow through on the terms of that contract.
To create a valid contract, three basic elements are essential: an offer, acceptance of that offer and valuable consideration. Insofar as you have told me that you have signed a legal document -- a real estate contract -- and presumably the buyer has placed some money as a good faith earnest deposit with a real estate broker, I suspect that you have a legal contract that can be enforced by you and against you.
After all, if the purchaser decided to back away from the deal, many sellers would be quite upset and would want some compensation for their troubles. Presumably, your purchasers are in the same shoes and have made all sorts of plans to move into your house. I suspect that it will come as quite a shock to them when they learn that you are now interested in voiding the contract.
I suggest that you discuss the situation directly with the purchaser. Even if you have a real estate agent, it probably is best for you to make the initial contact, under these circumstances, directly with the purchasers. Tell them honestly that you want out of the contract. They may be nice about it and let you terminate, as long as they get their deposit back. However, knowing people the way I do, I seriously doubt that you will find anyone that nice.
At the very least, offer to compensate the purchasers for all of the out-of-pocket expenses they have incurred so far, including such items as loan appraisal fees, credit report, legal and other settlement-related expenses.
You may want to ask the purchasers if they would lease the property back to you for a couple of years. It may be that the purchasers want the house but are prepared to defer occupancy and would be interested in letting you stay on for a year or two.
Under this agreement, you would not be in breach of your contract, and you may have the best of both possible worlds. Again, however, I doubt the purchasers would be willing to cooperate.
Remember that if you have used the services of a real estate brokerage, that company is probably entitled to a full commission regardless of whether you actually go to settlement. Presumably, the real estate broker has brought you a buyer who is ready, willing and able to purchase your house, and thus the broker is known as the "procuring cause" of the transaction.
Under your listing agreement, I strongly suspect that the broker will be entitled to a full commission -- regardless of whether the house actually sells. Discuss the situation with the real estate firm as soon as possible.
The firm may be willing to waive all or some of the commission and, of course, the choice is theirs -- and theirs alone.
Finally, you may have to get into serious negotiations with your buyer. If the buyers realize that they have you over the barrel, they may want to extract a substantial penalty if they decide to allow you to back away from their contract. Needless to say, this is all negotiable.
Both sides have their price and you will, I hope, be able to resolve the termination of the contract on an amicable -- albeit costly -- basis.
Keep in mind that if you cannot reach agreement with the purchasers, they have the right to sue you either for specific performance or for damages. Specific performance means that a court can force you to perform the terms of your contract -- in other words, sell the house to the purchasers.
Damages can also be costly because the purchasers may not be able to find another house quickly and may have considerable out-of-pocket daily expenses as a result of a breach of the contract. Even if the purchasers buy another home, the interest rate may be higher, which, of course, would also be an element in their damages.
It is unfortunate that you have now decided, after the fact, to get out from under the contract. Give serious thought as to whether you want to put both yourself and the purchasers into a very difficult situation. In the long run, it may not be worth your money or your aggravation to press forward with terminating your contract. Benny L. Kass is a Washington attorney. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, Suite 1100, 1060 17th St. NW, Washington, D.C. 20036. Readers also may send questions to him at that address