Most of the time the sale of a Home goes smoothly; but what if it doesn’t? When a Buyer makes an offer and the Seller accepts, absent some unmet condition, the parties have a binding contract. It can sometimes get lost in the excitement of a
home purchase that the reality is you are contracting for a major six-figure purchase/sale. What if a Buyer or Seller wants out of a binding contract?
Part I: The Real Estate Sales Agreement is a Contract
Once an offer has been accepted the Sales Agreement is a binding contract that is to be enforced by its terms. A basic principle of contract law is that when the contract language is clear and unambiguous, the parties’ intent should be given full effect according to its plain meaning unless it violates the law or is in contravention of public policy. Wilkie v. Auto–Owners Ins Co, 469 Mich. 41 (2003). Simply put, if you agreed to the terms, you will be bound to the terms.
If a party chooses not to follow through with closing on the home, that party is in breach. In the context of a residential home purchase, failing to close on the sale or purchase constitutes a “material breach” of the sales contract, since failing to go through closing goes to the “heart of the contract” – the sale of the home is what the contract is all about. Absent the existence of certain conditions discussed below, the party who is in breach could be liable for damages up to the amount of the entire contract price – a significant amount of money.
In this series, we will be looking into the following:
- Part 1: The Real Estate Sales Agreement is a Contract
- Part 2: What About Those “Contingencies”?
- Part 3: If No Contingencies Provide a Way Out – Then What? (If you are the Party Wanting to Close on the Home)
- Part 4: If No Contingencies Provide a Way Out – Then What? (If You are the Party Wanting Out)
- Part 5: Conclusion
By Real Estate Attorney Jeshua T. Lauka.
Jeshua is an attorney at David & Wierenga, P.C., a business law firm located in downtown Grand Rapids, Michigan. Jeshua practices in business, real estate, estate and trust work and related litigation. Jeshua has developed a focus on representing corporate and individual clients in distressed/foreclosure-related real estate matters, whether it is a corporate or construction industry client renegotiating a loan, or homeowners faced with being forced out of their homes.