Podcast
Questions and Answers
What is one remedy available to a home seller if a buyer fails to fulfill their contractual obligations?
What is one remedy available to a home seller if a buyer fails to fulfill their contractual obligations?
- Increase the price of the home
- Reduce the deposit amount
- Forfeit the buyer's earnest money (correct)
- Automatically extend the contract
Under what condition are courts likely to enforce specific performance in a home sale contract?
Under what condition are courts likely to enforce specific performance in a home sale contract?
- If the buyer agrees to negotiate a lower price
- If the seller can demonstrate financial hardship
- If the buyer has the financial capacity to complete the purchase (correct)
- If the earnest money exceeds a certain amount
What is a possible consequence for the seller if the buyer attacks the contract's terms?
What is a possible consequence for the seller if the buyer attacks the contract's terms?
- The seller is required to lower the sale price
- The seller can sue for criminal penalties
- The seller may have to negotiate a refund of earnest money
- The seller can terminate the contract and return the deposit (correct)
What limitation exists for sellers seeking damages beyond earnest money if a buyer defaults?
What limitation exists for sellers seeking damages beyond earnest money if a buyer defaults?
If there's a dispute concerning the earnest money, what is the recommended course of action?
If there's a dispute concerning the earnest money, what is the recommended course of action?
What consequence can a buyer face if a seller wrongfully fails to perform their obligations under a contract?
What consequence can a buyer face if a seller wrongfully fails to perform their obligations under a contract?
Which of the following is a situation where the seller can cancel a sale without penalty?
Which of the following is a situation where the seller can cancel a sale without penalty?
What happens if both the buyer and seller agree to terminate the agreement?
What happens if both the buyer and seller agree to terminate the agreement?
What must happen before earnest money can be distributed?
What must happen before earnest money can be distributed?
Which statement is accurate regarding contracts that may be considered unenforceable?
Which statement is accurate regarding contracts that may be considered unenforceable?
What is a common reason a seller might be legally allowed to back out of a sale?
What is a common reason a seller might be legally allowed to back out of a sale?
What should a buyer do if there is a disagreement regarding the disposition of earnest money?
What should a buyer do if there is a disagreement regarding the disposition of earnest money?
Why are courts generally reluctant to enforce specific performance in home sales?
Why are courts generally reluctant to enforce specific performance in home sales?
Study Notes
Seller Default
- A seller may back out of a contract due to various reasons, including changing circumstances or finding a better offer
- Remedies for a buyer when a seller breaches contract include:
- Money Damages
- Contract Termination with deposit return and expense reimbursement
- Specific Performance (forcing sale completion)
- Courts are reluctant to force sellers to sell
- Contingencies may excuse a seller from fulfilling the contract
- A seller may be excused if, for example, they are unable to find a new home after good faith efforts despite a contingency in the contract
- If a seller breaches a contract without valid contingencies, the buyer may be entitled to terminate the contract and recover payments made
Buyer Default
- Remedies for a seller when a buyer breaches contract include:
- Forfeiture of Earnest Money
- Money Damages
- Contract Termination with deposit return and expense reimbursement
- Specific Performance (forcing sale completion)
- Courts are hesitant to force buyers to complete a purchase
- It's difficult to recover more than earnest money from a buyer, especially if they lack the financial ability to purchase the home
- A substantial earnest money deposit serves as a financial assurance and encourages buyer commitment
Common Points
- Earnest Money: Funds paid by the buyer to the seller as a deposit and a show of good faith
- Distribution of Earnest Money:
- Requires agreement from both buyer and seller
- Disputes are resolved by a court, with funds deposited until a decision is reached
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Description
This quiz delves into the intricacies of real estate contracts, focusing on the rights and remedies available to both sellers and buyers in the event of contract defaults. It covers seller defaults due to various reasons and the remedies buyers can seek, along with the repercussions for buyers who breach contracts. Test your knowledge on this essential aspect of real estate transactions.
