Tuesday, June 15, 2010

What Would You Do If The Seller Defaults?



We often hear stories about buyers defaulting on contracts to purchase real estate. They "walk", they don't deposit their earnest money, they don't apply for their mortgage on time, they don't close by the closing date. But how often do you hear about SELLERS defaulting?

First, let's get the definition of default. According to the Florida Association of Realtors Residential Sale and Purchase Contract, Default is: "Seller fails, refuses or neglects to perform this contract".

I am not an attorney, but some examples of what seller default might be: failing to act on a required repair item, neglecting to remove tenants if specified in the contract, refusing to close.

Well, I had two cases in the last week. One example: I represent the buyer and the seller has decided not to do a required wood rot repair. The seller claims "he has done enough improvements" and is not doing any others. "The buyer should be happy."

According to the Florida contract, in the case of seller default, the buyer may "choose to receive a refund of buyer's deposit, without waiving the right to seek damages, or to seek specific performance". The contract goes on to outline the methods of dispute resolution.

The question is, with such a "minor" default, who would bother? If the wood rot is $100, should the buyer delay the closing to go through mediation, especially when he needs a home? If the seller did not leave the house broom-clean, if he failed to remove tenants on time, if he removed a small "attachment", should the buyer go to arbitration? If the closing were delayed a few days, and their is no per diem penalty paid, oh well?

In Florida, on both the buyer and seller side, these are not uncommon occurences. The problem is, if no one enforces the contract, nothing will change. You see, it is not normal custom in Northwest Florida to have individual attorney representation for our closings, like many other states. Thus, in the case of a default, the buyer or seller would have to spend extra monies to hire an attorney. They usually won't.

That is why Florida real estate transactions tend to have many of these nuisance defaults, and no one bothers. What say you?

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Email Wendy: itswendy@rulnickrealty.com

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