What happens when a seller decides he no longer wants to sell his property after a sales agreement has been signed? Does everyone simply walk away from the deal, or are there potential repercussions?
The short answer is yes, there can be major repercussions and unfortunately, this can prove to be extremely costly for the seller.
Property sales don't go through every time. Banks don't always grant bonds, the buyer passes away or there is a structural defect which only becomes evident after the sales agreement has been signed. In these instances, both parties generally walk away from the deal. It is however a different story if the seller decides to accept a higher offer (if this is not covered by a clause in the sale agreement) or simply decides that he no longer wants to sell the home and backs out of the agreement.
A number of things can happen under these circumstances. The buyer could sue for out-of-pocket expenses - in other words, a buyer purchases a home for R900 000, the seller pulls out of the deal and the buyer is forced to purchase another property. Unfortunately, he can't find anything similar within the same price range and is forced to buy another home for R1-million. The seller might then be held liable for the difference in value between the two properties.
The costs of the conveyancing attorney may also have to be taken into account. This of course depends on how far things have progressed, but it stands to reason that money will be owed and will have to be paid for any work that has been carried out.
While many assume that estate agents do very little for their commission, this is not at all true. It generally takes a great deal of time and effort to sell a home. Properties need to be advertised, buyers need to be sourced and shown the property first hand. Time is money and an agent is well within their rights to claim their commission on a sale that has been cancelled. After all, at the time they fulfilled their mandate by introducing a willing buyer to a willing seller.
It’s easy to assume that sales are cancelled because the seller has become greedy and wants to secure a better deal. However, there are numerous reasons why a seller could change their mind and renege on a deal. They may well have decided to sell because they have been transferred to another part of the country and are forced to cancel the sale if the transfer falls through. They could also simply change their minds about selling, opting to stay in the property instead. Unfortunately, regardless of the reason, someone is going to be out of pocket and there is a strong possibility that the seller will be held liable.
Selling a property is not child's play. Once a sales agreement has been signed by both parties, it becomes a legally binding document and a seller who decides to back out of the deal is probably going to end up paying far more than he banked on.