What If A Buyer Cannot Or Will Not Close

By The Brian Kondo Real Estate Team

Friday, February 10, 2023

What If A Buyer Cannot Or Will Not Close

With the significant increase in interest rates over the course of the year and the introduction of the 25% Foreign Buyer's Tax (up from 20%), there have been rumblings of worry from sellers that even if they get an offer on their home, the sale won't go through. Whether they're not able to sell their own home, or they cannot obtain a mortgage, there are protections for sellers.


The Law

One of the main reasons there is an Agreement of Purchase and Sale between a seller and a buyer is to protect both sides. What you sign to both sides must agree to. If a buyer writes an offer for a certain amount, lets say $500,000, they are allowed to also put in conditions on the offer. For example: they can make a condition that if they are not happy with the results of the home inspection, or if they cannot obtain financing, they back-out by not waiving those conditions. These conditions are only binding if both parties sign; this means that a seller does not have to agree to these conditions and can either reject the offer or provide a counter-offer. 

In the event that there is a mutually signed Agreement of Purchase and Sale and the buyer cannot complete the agreement for a reason that falls outside of the conditions in the agreement, the buyer is still legally responsible for making the seller "whole". This means that the seller is entitled to be put in the same position as the seller would have been had the buyer completed the transaction as scheduled.

What Happens To The Deposit?

In the event that a buyer cannot complete the Agreement of Purchase and Sale that they signed, they are not entitled to a return of their deposit, nor is their liability limited to the amount of the deposit. In general, the seller is entitled to the deposit, as a protection for providing good faith and wanting the sale to go through. This deposit is not automatically given to the seller, and if not mutually agreed to by both the seller and the buyer, is usually done through a court order. However, this does not mean that the seller cannot re-list the house in the meantime, meaning they could stand to receive the deposit / damages for the fallen through first sale as well as the proceeds from the full sale of the house when it is completed the second time.

How I Ensure Your Deals Get Closed

Whether you're a buyer or a seller, you want to make sure you're protected from these turbulent situations that can leave both sides feeling vulnerable. I have extensive experience in protecting my sellers and buyers so that their sales go through the first time. If you would like to know what those tips are, please reach out to me here. I would love to share with you, how you can safely buy or sell in this market with me. 

You can also ask me about using my Guaranteed Sale Program to make sure your deals close. Finally, if you're overleveraged, I can help you sell your home and still close. Again, find out how by reaching out to me here. CLICK HERE! or you can email me at brian@briankondo.com

Remember, your referrals change lives! We donate a portion of our income on every home sale to a great worthy cause like The Children's Miracle Network / SickKids Hospital. To find out more visit: www.ReferForSickKids.com.

Thanks for reading this week's BLOG.


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