What happens when a real estate buyer or seller don’t do something their contract calls for?
Real estate contracts require close reading. The most widely-used contract in the Anchorage market is provided by Alaska MLS Inc. to its real estate licensee members.
That contract frequently uses the word “terminate”. For instance, if the seller fails to accept the offer by the day and time the buyer states in the offer, the offer terminates. If the offer has been agreed to and the buyer fails to produce a letter from the lender that verifies the buyer’s qualifications, the agreement terminates. If the buyer and seller fail to agree on a buyer’s or a lender’s repair requests by the stated date, the agreement terminates.
Nobody has to do or sign anything when an agreement terminates. The deal is off and the buyer’s earnest money gets refunded. (A real estate broker holding earnest money may require confirmation in writing, however.)
Default is a different matter. The rules are different for buyer and seller.
A buyer is in default if he or she fails to tell the seller that the lender won’t meet the agreed date for granting a loan commitment. A buyer is in default if after obtaining a commitment he or she doesn’t close.
Default is a different matter.
A seller might be in default if the seller doesn’t close without good cause.
If a buyer is in default the seller gets the earnest money. By contract the buyer and seller agree that this is the entire remedy for a buyer’s default. The seller can’t pursue a claim for other damages, or get a court order requiring the buyer to close.
By contrast, if a seller is in default, a buyer would have the right to seek specific performance. That means going to court to get a judge to order the seller to close.