The home Jack and Mary Green decided to buy needed more work than they really wanted to tackle. After some discussion, however, they decided to go for it.
They liked everything else about it. The size, location, amenities and price all seemed to more than compensate.
They negotiated an Offer to Purchase on condition they:
- Obtain a mortgage, insurance, and a satisfactory home inspection, all within 10 days, and
- Sell their existing home within 40 days of acceptance.
The mortgage and insurance were approved and the home inspector confirmed work they knew the home needed. So these conditions were met and removed.
Selling The Home Became a Challenge
Almost 40 days later, their existing home sat unsold. Jack and Mary still wanted the purchase so they asked for an extension to the agreement.
An Unusually Long Extension to Closing
The sellers agreed to an additional 2 months for the Green home to sell and a new completion date of 6 months beyond the original closing, an unusually long delay.
Buyer Remorse Sets In
About a month later, the Greens received a good offer on their listed home. By this time, however, they had lost interest in the home they wanted to buy and chose not to negotiate a sale of theirs.
A Release is Sought and Refused
They directed their REALTOR® to inform the seller’s brokerage that they wanted out of the purchase contract and asked to be released. The seller refused to sign releases on the basis that the buyer did not act in good faith in meeting their home sale condition.
The issue became a legal one.
After a lengthy negotiation between the lawyers, it cost the buyers $5,000--their $2,000 deposit and an additional $3,000--to be released from their contractual obligations to the seller.
What We Can Take Away from this Story
- Too much time between offer acceptance and closing can often trigger doubt about one’s buying choice.
- With contracts, the standard of good faith obligates all parties to deal fairly, honestly and to take reasonable steps to meet contractual obligations.
- The buyer might have waited for his sale condition to expire. That, however, does not guarantee that the seller would agree to a release if he believed that the buyer had not acted in good faith.