I’m a homebuyer and am under contract to close on a fully-furnished and fully-decorated house that we plan to use as a vacation rental property. Closing is supposed to be in 2 weeks. The house is perfect and beautifully decorated and is just what we’ve been looking for. Aside from sometimes using it ourselves, I estimate it would have cleared $30k a year income after accounting for all expenses.
Something fell through with the house the seller was supposed to purchase and now they want to cancel the contract. They don’t even want to reimburse us for the $1500 we have spent on inspections, let alone provide additional compensation. Obviously I’m not agreeing to that. This is in NC, where the buyer alone has the right to cancel a contract.
From my understanding, we have two paths forward:
1. Agree to termination for a price, or
2. Force the contract to go through.
As much as I want to do #2, it makes me worried about the integrity of the house and the things we’re buying so I’m leaning toward option 1. My main question is what is a reasonable amount to request as a termination fee?
TLDR: seller no longer wants to sell and wants to terminate contract. As the buyer, what amount of money should I ask for to terminate the contact?
Seller wants to cancel contract (advice please)
byu/rosieposie90 inRealEstate
Posted by rosieposie90
21 Comments
I’d go through with the sale, and if they trash the home or furnishings you cancel on them.
Actual expenses + documentable damages
You didn’t list what might be a viable option for you… Change the closing date to allow them more time to find THEIR new home? Obviously, they have to maintain the property fully in their name and at their expense until the new closing date, and there should be a monetary concession to you for extending the closing.
Talk with an attorney before you say anything to anyone to to ensure they can’t “catch you” saying something that would give them an out.
Give them three choices (a) push the closing back 60 days to let their purchase happen, (b) they pay you liquidated damages of your out of pocket expenses and 5 percent of sales price or (c) you sue them for specific performance.
What does your contract say? Is there a purchase contingency for the sellers?
My favorite mantra in the real estate world which I always ask myself is “what would the judge say” if you all had to stand in front of him/her? What are your damages? In the case of a seller not wanting to sell it would be the costs you incurred to get to where you are so probably just the cost of inspections, appraisal if there was one plus the return of your earnest money. Some contracts limit you to this anyway. You could sue but…… what would the judge say?
Yes, you could sue for specific performance and force the sale. How much is your earnest money deposit?
I recently had the exact same situation, and I negotiated a $5000 payment from the seller to my buyers.
It’s an income property. What about a sale with a rent-back clause for a specific period of time? Start making money right away.
Honestly – I would ask for all your fees and one year of lost net income ($30k)
Contracts are contracts – and it’s a buyers market, they can likely buy whatever they want.
I don’t think you can force someone to buy a house in NC. Did they cancel after Due Diligence period? Just go ahead and buy the vacation home and relist your house. You get to keep the Due Diligence fee paid by the buyer. It’s nonrefundable in NC.
Or you could do a rent-back. Buy the house and rent it back to the seller while they look for a property.
What is your concern with #1? Do you really think they’re going to trash the house, remove copper pipes, etc.? If they do, they’ll be damaging their own property, as you won’t close.
From what people have experienced and described here, it takes about two years and 40K to force a sale.
If I were in this situation, I’d try a strongly worded letter (from an actual lawyer) “demanding” the sale, or maybe some “reasonable” concession in exchange for dropping the whole thing. Then stand by and hope they don’t realize your situation is nearly futile.
You could also try tying up the house so they *at least* can’t sell it to someone else, but I forgot what that’s called. The lawyer will know.
Force them to close. It’s as simple as that. Why waste your time and efforts finding another investment property. Whatever their reason for wanting to back out is, it is not your problem. Sue them if they refuse to cooperate with the closing process.
Can you do a sale leaseback for a period so they can still have time to find a new place? Or delay closing for a fee?
I would sue for performance. You will easily win
Make them perform. They accepted the offer
Sellers are not going to agree to anything unless you get an attorney involved. It’s their house and they want you to go away until you prove to them the contract means something.
Per the contract in NC, you have only two choices wehn the seller breaches terms.
1. Sue for specific performance. This can be a complex process that involves attorneys. If you prevail, the seller will likely be instructed to refund your attorney fees.
2. Terminate the Contract. You are entitled to return of both the Earnest Money Deposit and the Due Diligence Fee, together with the reasonable costs actually incurred by Buyer in connection with Buyer’s Due Diligence.
$1500 is the reasonable amount here imo
Double it for your trouble if you want I guess, more than that is being greedy imo