We our selling our home and buyers presented a $1000 deposit with their offer and the purchase and sale would be signed after acceptable inspection of the house as long as there were no significant structural issues. The inspection pointed out a crack in the foundation. No indication of significant structural damage was made at the time of inspection, only a recommendation for further evalution. The buyers, backed out of the offer, demanding full deposit restitution, without agreeing to evaluation by a structural engineer. Can they do this? While the offer was on the table, the house was no longer being shown to prosective buyers and we lost other offers made at that time. What is the purpose of the deposit - how is it expected to be used? What is the recourse for the seller? Can we accept an offer and still continue to show the house to other buyers? Why isn't the deposit forfeited if the inspection/evaluation isn't completed?
Submitted by dsfrenchie on Thu, 06/11/2009 - 19:31
Posted in
Editor's Response
Your rights in this situation will depend, in large part, on the wording of the Purchase and Sale Agreement. Typically, the Agreement will require the broker to hold the deposit in escrow and will spell out some sort of dispute resolution mechanism for cases like yours. You and the buyer have a disagreement over whether the crack in the foundation satisfies the contingency and allows the buyer to back out. Unfortunately, unless you and the seller can come to an agreement (split the deposit?) you may need to ask a court to resolve the dispute. Unfortunately for you, that is a lot of aggravation for $1,000. You will not likely be able to recover other damages above and beyond the $1000 because most P&S agreements specify that the deposit will act as 'liquidated damages' (meaning the parties agree that the deposit amount will be the only damages available to the seller).
In answer to your second question, you absolutely can show the property even after it is under agreement. A good broker will respect your wishes to keep showing the house and will usually tell any people who wish to see the house that it is under agreement (so they are aware of the circumstances). This is done all the time because so many deals fall through before the closing date. Good luck, and please tell your friends about The Forum.