Question

Imagine that you are selling a house and your asking price is $250,000. On April 1^st you receive an offer on your house for the asking price and you have accepted the buyer’s offer.

Although the buyer’s proceeded through the process in good faith, you receive bad news near the end of the process about 30 days later. The buyer has failed to secure financing from their lender they are forced to terminate the contract.

Now, a month later, the busy season for the real estate market is over. As the seller, you are quite disappointed because now you have to put your home back on the market. You think about how many other qualified buyers you missed out on while you were under contract with the original buyer. Now, the majority of the other qualified buyers have already found other homes.

Although it’s different in real life, hypothetically think about what types of remedies you would want to pursue for breach of contract if you could. What proactive steps could you take to prevent this type of situation from happening again in the future?

Answer 1

In this case the owner needs to be compensated for the loss of his time and the potential owners. And he should be paid compensatory damages and he should make a clause in the contract that in case of breach of contract the owner will be liable to some amount of money which will compensate him for the lost time and resources. Another proactive precautionary step would be to take a certain percentage of the value of the house as advance payment and the rest when the new owner shifts in. This will prevent the new owner to not breach the contract as if does so, the advance payment will be confiscated by the old owner as a compensatory damages. This measure would prevent the buyers from going back on their word and a rational person would think twice before making an offer and think about the consequences as he wouldn't want to pay compensation in the future.