![]() ![]() The buyer may also commence a legal action to terminate the purchase agreement by judicial action, but this remedy is rarely used by buyers due to the time and cost involved. If the seller fails or refuses to cure the default within the fifteen or thirty-day time period required by the notice, the purchase agreement is canceled and the buyer will generally be entitled to a refund of the earnest money. Statutory cancellation may be commenced by the buyer in response to the seller’s breach of the purchase agreement, which requires the buyer to serve a legal notice on the seller. The seller and buyer may voluntarily sign a cancellation of purchase agreement, which terminates their rights in the purchase agreement, and which may refund the earnest money to buyer, to seller, or a combination of the two. If successful, the buyer receives a judgment, which may be voluntarily paid by the seller or collected from the seller using judgment collection techniques.Ĭancellation of the purchase agreement may be accomplished in the variety of ways listed above. In the lawsuit, the buyer must prove the damages caused by seller’s breach of the purchase agreement. In general, a buyer must sue the seller within six years from the date the buyers cause of action arose, which is typically measured from the failed closing date. ![]() ![]() The buyer may seek money damages for a seller’s breach of the purchase agreement by suing the seller. A successful action for specific performance will result in a court order requiring the seller to sell the real estate to the buyer. In the standard purchase agreement form approved by the Minnesota Association of REALTORS®, an action seeking the remedy of specific performance must be commenced within six months from the date that the buyer’s cause of action arose, which is typically six months from the date identified for closing in the purchase agreement. Minnesota law recognizes that money damages are not sufficient to compensate a buyer for a seller’s failure to perform a purchase agreement. Under Minnesota law, “specific performance” is generally available to the buyer when the seller defaults, because real estate is unique (no two houses, even if identical, can be located on the same parcel of real estate). If the seller breaches the purchase agreement by refusing to sell the real estate to the buyer, the buyer generally maintains three courses of action: (1) the buyer may require the seller to “specifically perform” the purchase agreement by selling the real estate to the buyer (2) the buyer may seek damages for the seller’s breach of the purchase agreement or (3) the buyer may cancel the purchase agreement by voluntary agreement, by statutory cancellation or by judicial cancellation. When all contingencies have been satisfied, the purchase agreement becomes the binding obligation of the seller to sell and the buyer to buy the real estate according to the terms and conditions described in the purchase agreement. A purchase agreement is not an enforceable agreement to sell or buy real estate when one or more of the contingencies remain unsatisfied. Many purchase agreements contain a wide array of contingencies, including contingencies for buyer financing, property inspection, the sale of buyer’s home, and title review. When a deal sours, a real estate attorney must first determine whether there is a binding purchase agreement between the parties. The following provides a general overview of the remedies available to sellers and buyers when the other party refuses to close the real estate transaction.Ī real estate transaction is documented with a purchase agreement in which the seller agrees to sell and the buyer agrees to buy real estate. Since real estate agents spend considerable time and money to sell properties for their sellers and to find properties for their buyers, they are also adversely affected by the inability to collect a commission at closing. We receive many inquiries from real estate agents, sellers and buyers when a seller or buyer refuses to close on the real estate transaction, and the other party is left to deal with the consequences. ![]()
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