Legal Question in Real Estate Law in Utah
seller wants to back out of purchase agreement
husband had a job transfer and we need to sell. Found a realtor,signed purchase agreement. closing is in 2 days. We found out last thursday that there is a prepayment penalty. We agreed that we would sell and breakeven owing nothing by selling below market value commission included in sale price. Now realtors says we have to come up with 14,000 at closing. We can't afford toget a loan and pay that. Buyer/agent refuses to change terms or lower commission. Our realtor says that it so close that we are binded to that contract. Im told by other source we can back out but will have to match earnest money. We have agreed to let buyer have handyman come and work on huse before closing. we understand that we may have to reimburse for work.We simply cant afford to sell if we have any out of pocket expense!We refinanced in 11/06 mortgage company says they will notlet go of prepayment.realtor has done very little to help.she only gave us two options:get a loan to pay $12000 or see if motgage company will waive penalty please help!!
2 Answers from Attorneys
Re: seller wants to back out of purchase agreement
If you can't get cooperation, and it looks like you've exhausted that possibility, your choices are to go through with the transaction, which you don't want to/can't do, or to breach the contract and refuse to sell.
Read your Real Estate Purchase Contract. If you breach the contract the other party has three options: actual money damages, liquidated damages, or specific performance.
Liquidated damages are tied to the amount of earnest money put up by the buyer. If they choose this option, they will get a return of their earnest money and you will have to match that amount. The contract doesn't specify a time for you to do that; it is presumed to be immediate, but that's where reality kicks in and you pay when you can or get sued for that amount plus attorney's fees.
For the other two options a suit must be filed. For actual damages, they must prove what money damages they have incurred that are directly related to your breach, such as having to live in a motel, eat at restaurants, get a higher interest rate mortgage, etc.
The other option, specific performance, is a suit asking for a court order ordering you to sell on the terms of the contract~~just holding you to the agreement, plus attorney's fees.
As you might expect, the suits will cost time and money up front for the plaintiff.
It is their choice which option they wish to use. Nearly all will choose the liquidated damages amount, but you are at risk for any of the options.
In a lawsuit they may initially ask for all three, which they can do, but before trial they will have to choose which option they want.
Whatever you do, your listing agreement with your agent undoubtedly calls for payment of the real estate commission upon them presenting a "ready, willing and able" buyer, which apparently they have done. If you refuse sell and refuse to pay the commission the real estate company is entitled to sue you for breach of that contract. Many real estate companies choose to not sue their own clients. Again, you are at risk, but the company may choose to let it go. Perhaps the listing agreement can be re-written if you will retain that company for continued listing.
Good luck.
Re: seller wants to back out of purchase agreement
Talk to the buyer/agent to see if he will agree to make payments in your name for the period to avoid the prepayment penalty. You will have to assume the risk that the someone down the chain of title may not make payments, but you could repossess the house. Other option is to refuse to close, but the realtor may sue you for specific performance.
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