In the past 15 days I have personally dealt with five collapsing deals involving buyer’s remorse. For the first time in six years, I am seeing people intentionally backing out and not completing their real estate purchases.
My perception is that people who have purchased properties between December and February are feeling that they have paid too much, and they believe that by not completing their purchase, they will only be losing their deposit. This is a myth!
As we know, after a real estate purchase/sale contract has been fully executed with at least $1.00 deposit paid, if one of the parts does not complete, the amount paid for the deposit will have nothing to do with the damages to be paid by the breaching party.
What are the consequences from not finalizing your real estate purchase?
- Your deposit will be frozen with the legal representative holding it, until parties reach an agreement or when court determines who gets paid what.
- Seller will be responsible to mitigate damages, by re-listing the property and trying to sell ASAP.
- Buyer that did not complete, could be responsible for the following:
- All legal fees (their lawyer and seller’s lawyer.)
- Additional realtor’s fees for the work of re-listing the property and additional commissions paid.
- Any loss incurred by the seller – difference between the sale price they would have received from original buyer and what they were able to sell it for later.
For example, in one example, the original sale happened for $1Million. Buyer did not complete, and sellers listed again, selling for $700k. Original buyer (regardless of their deposit) could be responsible for covering the $300k loss from the sellers + all lawyer’s fees incurred by parties + additional commissions paid for the second sale.
I wanted to share this with you in case you are also experiencing the same thing. I will be doing a live discussion with a lawyer specializing in Real Estate litigation on Thursday the 28th of April at 9 A.M.
At Zancope Notary Public, our specialties are Wills and Estate Planning documents (Representation Agreement and Power of Attorney) and real estate. We are a full-service firm with two notaries full time at the office. We also offer real estate services for clients in Langley and throughout Greater Vancouver and the Fraser Valley. We can help you with buying, selling, and refinancing real estate, and provide family property transfers and independent legal advice.
If you have any questions about this article or estate planning, in general, or if you want to make an appointment with Zancope Notary Public, please contact us at (604) 260-6783.
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