The purchase or sale of a home or other real estate property in Rhode Island starts with a buyer making an offer on the property that the seller accepts, and the parties enter into a purchase agreement contract to proceed with the transaction. A transaction is not complete, however, until all of the final documents are executed, payment is tendered, and the title is transferred to the buyer at the closing. Unfortunately for sellers, it is not uncommon for buyers to back out of a purchase after an offer is accepted, and the property is under contract. A recently published trade industry article discusses how a contract can fall through, and outlines the methods sellers can take to protect their rights and minimize the damage done if a buyer gets cold feet and backs out before a sale is finalized.
The most common way a sale falls through before closing involves contingency clauses in the initial contract. Contingency clauses release a buyer from the obligation to purchase a property if certain conditions occur. The most commonly triggered contingency clauses involve a buyer getting out of a contact because they cannot secure financing on the property or are unable to sell their current home in time to purchase the new home. Contingency clauses may also be triggered if a home inspection or appraisal yields results that give the buyer second thoughts about the agreement’s terms. With the help of a skilled Rhode Island real estate attorney, sellers can ensure that contingency clauses in the initial purchase agreement are not drafted too broadly to encourage a buyer to change the terms of an agreement after the offer has been accepted.
Even if all of the contingency clauses are met and a buyer should proceed with a purchase, they may get cold feet or have second thoughts and try to get out of the sale. If this happens, a seller is left in a difficult position, because they are losing time and money while the home sits under contract, and if a buyer ultimately backs out, a seller may be left back at square one, putting the home back on the market. To prevent these problems, sellers can employ a qualified Rhode Island real estate attorney to include conditions within the purchase agreement that allows the seller to sue a buyer for damages if they back out of a sale without justification. Additionally, sellers can include what is known as an escape clause in the purchase agreement, which allows a seller to entertain and accept offers from other prospective buyers while the home is under contract. With an escape clause, if a seller wants to accept an offer from a different buyer, the original buyer will be given a certain amount of time to waive the contingencies and proceed toward a closing, or else the new buyer will be in a position to purchase the property.
Legal Counsel Reduces the Risk of a Sale Falling Apart While Under Contract
If you are selling a home and considering an offer, having an experienced Rhode Island real estate attorney by your side to assist with the purchase agreement and subsequent requirements through closing can prevent you from suffering the worst consequences in the event your buyer wants to back out of the sale. The skilled lawyers at Bilodeau Capalbo will negotiate a real estate purchase agreement that minimizes unnecessary or disadvantageous contingency clauses, and we can protect you financially if a buyer fails to follow through on their offer. Schedule a free consultation with an attorney at Bilodeau Capalbo today by calling our office at 401-300-4055.