It can be exciting when as a buyer, your offer to purchase your dream home is accepted. However, that excitement can turn into frustration, anxiety and fear if the seller changes his mind and decides no longer to hold to his end of the bargain to complete the transaction. Although there are various legal remedies available to innocent parties in collapsing transactions, figuring out what to do when a transaction fails can be exhausting, frustrating and fraught with risk. When the seller doesn’t comply with the terms of your agreement, it’s extremely important that you immediately obtain legal advice to evaluate the situation carefully before deciding on the next step. The timely hiring of a lawyer with experience handling collapsing real estate transactions can help ensure that your legal rights are protected during this critical period.
Why Would a Seller Back Out from a Transaction?
A seller might back out of a real estate transaction because they:
- changed their mind about selling the property;
- receive a better offer from another buyer;
- encounter financial difficulties preventing them from completing the sale;
- learn that the property has unexpected problems or defects they don’t want to fix, or
- have other personal reasons that prevent or discourage them from completing the sale.
How Can You Protect Your Interests During a Real Estate Transaction?
There are some general steps you can take in the event of a collapsing transaction. They include:
Reviewing the terms of the sale
Before signing the agreement, thoroughly read each page and seek legal advice from a real estate professional to safeguard your interests. Check the terms of the sale agreement to see if there are any provisions for what happens in the event of collapsing transactions. Make sure you understand the legal rights and obligations of both parties to the contract so that you’re aware of what you are entitled to, and what you are obligated to do. Reviewing the contract with a lawyer ensures that the contract reflects what you agreed on and so you won’t be caught off-guard.
How Can a Lawyer Safeguard Your Interests During a Real Estate Transaction?
Filing a lien against the Property
If you have a valid contract and you insist on purchasing the property, one of the first steps you should discuss with your lawyer is preserving the property so that it is not simply sold or transferred to somebody else. Your lawyer may advise you to file a lien known as a Certificate of Pending Litigation to freeze the property and alert other parties that the property is tied up in litigation. This can help ensure that until the dispute is resolved, the property will remain available and under the seller’s name so that hopefully, the transaction may continue in the future.
Suing for specific performance
In addition to filing a lien, you as a buyer may also ask for a remedy known as “Specific performance”. This is a remedy that a buyer may ask for when a seller refuses to complete a contract but insist that the seller carry out his performance of the contract. The idea behind the specific performance is that monetary compensation for a particular breach of the contract won’t always be sufficient. After all, if it’s your dream home, you may not be able to find a replacement so easily. However, specific performance is not easily granted so your lawyer should assess whether there are good grounds to claim this as a remedy.
Suing for damages
Damages that the buyer incurs due to the seller’s breach of contract or misrepresentation may be claimed by the buyer. Damage claims may include expenses such as closing costs associated with the failed transaction, moving and storage costs, additional property or rental costs, interest due or lost because of the breach and professional fees. Your lawyer will be able to consult you for the different types and quantum of damages that you may claim, some of which may not be so immediately obvious.
Seeking legal advice
If you’re concerned about protecting your legal rights under a collapsing transaction, seek legal advice from a qualified lawyer. They can help you understand your rights and advise you on the best actions.
Are You Looking for a Real Estate Lawyer in Richmond and Metro Vancouver, BC?
If you bought a property and are dealing with a collapsed transaction, contact us at Bernard Lau and Co.
We can advise you at every stage of the transaction, from negotiating the details of the contract of purchase and sale to settling disagreements during closing.