In any transaction, be it a real estate deal or any other deal, it is understood that both parties keep to their side of the bargain. But when one person fails to fulfill his responsibilities, it is said to be a breach of contract. In a breach of contract in real estate, the seller may feel the heat when the buyer pulls away or vice versa. The buyer/seller may feel that he does not want to buy/sell the house. The reasons could be anything, and anything can cause the breakage of terms and conditions. For example,
- The buyer didn’t receive the mortgage
- Buyer was not able to sell his current house
- The seller failed to conduct the home inspection
- The deed of the property was not delivered in the correct manner
Breaching a contract is sad because when the buyer does it, he would be penalized and the buyer has decided that getting penalized is a much better option when compared to following through the contract. When the buyer breaches the contract, the seller has the right to cease all that he has been doing to get the house sold to the buyer. When he collects the penalty, he can bill the buyer for all the efforts (experts) he has done to make the house ready for the buyer.
If there has been a buyer breach in your case then you are free to sell the property to another interested buyer. You are now under no obligation to sell the home to the “buyer” who has breached the contract. If the buyer has given you a deposit, it becomes yours, irrespective of whether you sold him the property or not. You can take the matter to court if there are disputes. Normally, the decision would be in your favor.
The solution for the breach often depends on the circumstances involved, and in most cases, both parties will have to the bear with the consequences. Sometimes, a breach can be resolved with the help of a dispute resolution process, but this will be done only if such a thing is mentioned in the contract. There are three main stages to this process (1) Arbitration, where the seller and the buyer submits the dispute to a neutral arbitrator who would give a fair decision. If that stage is successful, you don’t have to go to court; (2) A third party steps in and there will be a solution with mutual consent and (3) Small claims court, where you can submit the dispute for claims less than $3,000.