Imagine you have been searching for your dream home for years. You have contacted all the estate agents in your area, spent hours online poring over property sites like Private Property, and visited hundreds of showhouses - all in the hope of finding the perfect new home.
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When you finally find the perfect place that is within your price range, you put in an offer, which is accepted by the sellers. Then, just as you’re about to start packing, the sellers change their minds.
Although this doesn’t happen too often, when it does, buyers can be baffled. After all, signed agreements are binding no matter what. Or are they?
Gunston Strandvik Attorneys take a look at when sellers can and can’t back out of a home sale - and what recourse there is for buyers.
Reasons
There are many reasons why sellers might back out of a sale at the last minute. In most cases, the sellers simply haven’t managed to find a replacement home. But is this reason enough for the sellers to be let off the hook without any ramifications?
According to Gunston Strandvik, the answer is yes in the following instances:
The contract hasn’t been signed. Before the Offer to Purchase (OTP) has officially been signed by both parties, both sellers and buyers have the option to back out of a sale at any time. However, once the OTP has been signed and accepted by both parties, it becomes a legal binding contract. Both parties are then required to fulfil their responsibilities as set out in the document.
The sellers have stipulated an escape plan in the contract. Sellers can place addendums within the contract that say they can back out without penalty.
Contract terms cannot be met. The OTP will contain all the terms and conditions relating to the sale, including any suspensive conditions that should be met in order to make the agreement binding and enforceable. For example, these could include that the buyers must raise a mortgage bond by a specified date. If one or more of the suspensive conditions cannot be met, either the buyers or sellers are legally allowed to back out of the sale.
No deal
Aside from the above reasons, once a real estate transaction has a fully executed purchase agreement, it’s not that easy for sellers to bail out.
In most cases, the cancellation of an executed purchase agreement is not admissible in South African Law. It would require a court order to bring about any changes, say Gunston Strandvik.
Writer : Sarah-Jane Meyer