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Dear Steve,
If a seller does not cancel a purchase agreement with someone and goes ahead and sells the home to someone else,
is he liable for damages to the first party? This happened to us and we are sick about it.
-- Noah
Dear Noah,
That depends on many things, foremost of which
is the language in the purchase agreement you
signed. For example, was there some kind of contingency
such as a kick-out clause, also known as an escape
clause, release clause or first-refusal clause
written into the contract and exercised by the
seller? Such contingencies, sometimes called 72-hour
clauses (although they can be of varying negotiated
durations), allow a seller the right to accept
a better offer under certain circumstances.
If the purchase agreement, say, was contingent on you first selling your existing home or obtaining
financing, and you weren't able to do so in a set period spelled out in the contract, the seller may sell the house
to a second buyer by legal right.
If that was the case, you should have been notified in writing and given at least 72 hours -- or
whatever negotiated time frame you agreed to in the contract -- to "perform," minus any contingencies you set, or
lose the house to that second buyer.
You, the first buyer, would also be expected to make yourself reasonably available to receive such
a notice, which means leaving a contact address to be reached if you are going out of town.
Of course, this is mostly speculation without knowing additional details. But for a seller to
out and out defy the terms of a purchase agreement in order to sell to a second buyer would likely be actionable.
However, breach-of-contract suits cost lots of money and take lots of time -- something few of
us have. That's exactly what some unscrupulous sellers, who feel their odds of actually getting sued are minuscule,
bank on when they pull this sort of trick.
If you consider the house you lost out on as your dream home and you have invested a nice chunk of
money in inspections and other due diligence, one option may be to threaten a lawsuit through an attorney with a
promise to hold up the sale. That may be enough to muddy the waters and scuttle the seller's backup sale. Then
again, maybe not. You'd better see a real estate lawyer or other qualified attorney, and quick, if you want to pursue
legal resource.
At least you are in your element in this buyer's market, and will likely have many other options if
you can't lay claim to your first choice.
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