Buyer’s Remorse

This question comes from Megan H., a real estate investor out of Texas who owns property here in metropolitan Detroit. She writes in to say that she is selling her property in Waterford, Michigan. Megan and the buyer are under a purchase agreement and are scheduled to close on the transaction later this month. However, the buyer has informed Megan that they will not be closing because the buyer is concerned about an issue with the roof. According to Megan, her buyer raised this concern long after the buyer had inspected the property and had waived their inspection contingency. The buyer is now bringing it up days before the scheduled closing.

Additionally, Megan says that the buyer agreed to take the property in ‘as is’ condition. Finally, Megan says that there is still a title issue that she has to clear up before the closing.

So based upon these facts, Megan wants to know what her rights are against the buyer if the buyer does not close as agreed in the contract. Really good question Megan.

Obligations of Each Party

Generally speaking, when a party does not close on a purchase agreement, which is a legal contract, and there are no remaining contingencies for the parties to the agreement to close under the purchase agreement, then an action for specific performance can be brought against the non-closing or breaching party by the party who wishes to close.

Specific performance is a legal remedy where the damaged buyer or seller requests that a court compel the breaching party to perform their obligation, and complete the transaction.

Action to Compel the Sale

Courts can do this because in property law, real estate is considered unique and therefore, money damages are not adequate to compensate the party who wishes to complete a purchase agreement, and obtain or sell a piece of property. 

So, Megan, if your buyer does not want to close, and all of the contingencies—in this case, the home inspection contingency is waived, then you could file an action to compel the sale.

Buying ‘As Is’

I want to mention that when Megan said that the buyer agreed to buy the property ‘as Is’, buyer’s still have the right to inspect a property even if they agree to take the property ‘as is’. During the inspection contingency, they can reject the property based upon their findings. In Megan’s case, since the buyer’s time frame for any objections to the buyer’s inspection has passed, the buyer can no longer assert the roof as a reason for failing to close.

Other Issues

One more item, Megan. You said that you are still clearing up your own title issue before closing. So at this time, it sounds like even if the buyer were prepared to close, you are not. Before you make any legal demands on your buyer to close, you should make sure that you can close. Title issues that delay a closing beyond an agreed-upon closing date may allow your buyer to walk away from the closing without any liability to you.

Megan’s question is a great illustration of how every transaction is different, and therefore the legal solutions will vary with each fact scenario.

I hope you found this information helpful Megan.

 

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