When a Seller Breaches a Real Estate Contract

Attorney Roy Oppenheim from Oppenheim Law provides insight on the scenario where a seller in a real estate transaction decides not to close, thereby breaching the contract. The reasons for this can vary, such as the seller or their spouse falling ill or passing away, or the seller simply changing their mind about selling. In such situations in Florida, the buyer has a few options. They can attempt to retrieve their deposit and additional funds to cover costs related to inspections, relocation, and securing a new residence. These expenses can be considerable.

Another recourse available to the buyer is to invoke the specific performance clause in the contract, legally compelling the seller to uphold their promise to sell the property. If this course of action is pursued, a court can mandate the seller to proceed with the sale. In such a scenario, the seller might also be required to cover not only their legal fees but the buyer’s as well. This can be a financially taxing consequence for the seller. Nonetheless, the seller can opt to stay in or lease out the property for a year or two during this process. If property prices depreciate, the buyer may choose to withdraw; however, if prices appreciate, the buyer has an advantageous position by having a secured option to purchase at the initial agreed price, irrespective of the increased market value.

Full transcript:

Hi there, Roy Oppenheim from Oppenheim Law. One of the big questions we always get is, what happens if a seller in a real estate transaction changes their mind and does not want to close, and ultimately is committing a breach of contract? So, this is the Seller now. So, the seller has a contract with a buyer, and the buyer has put a deposit down, and the seller says, don’t want to close.

Now, you know, in some circumstances, what happens if the seller dies, right? Well, in some states, you actually have a provision if the seller dies, the deal is off. In Florida, we don’t have that. So, if the seller dies, or if the buyer dies, it doesn’t matter, the deal goes on. A lot of times people will just agree to say goodbye to the deal, but the reality is if the seller decides not to close for whatever reason, maybe they get sick or something, their spouse gets sick, maybe the spouse dies, whatever it is, if the seller decides to change their mind, what can the buyer do? And the answer is the buyer can certainly try and get their deposit back, they can certainly try and get extra money back for the cost associated with doing the inspections, doing the serving, moving out of another place, trying to find another place. And it could be pretty extensive.

Or they can say, you signed this contract with me, we have a good contract. There’s a specific performance provision in the contract, and that simply means that the buyer has a right to sue the seller and force the seller to keep his promise to sell the property. And if the seller says, no, you go to court, and a judge can order the seller to sell the property, and that’s called specific performance. And on top of that, based on the attorney fee provisions in the contract, the seller could be obligated not to just pay his own attorney, but also pay the buyer’s attorney. And so, it could be a very expensive proposition if the seller decides to breach. But in the meantime, the seller gets to stay in the house for another year or two. The seller gets to rent it out for another year or two, and if prices drop, then the buyer may decide he really doesn’t want the house.

Typically, if the price keeps going up, the buyer almost has an option locked in where they now have the right to buy the property at that original price, and if the price keeps going up 10% a year, they get to buy it not at the new market price, but at the price they agreed on a year or two ago. Those are your remedies if you are a buyer, and your seller has decided to change their mind. Roy Oppenheim from the trenches.