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Contracts and buyers who ‘change their mind’

October 11, 2019
By ERIC FEICHTHALER - Real Estate Law , Cape Coral Daily Breeze

Dear Mr. Feichthaler:

I am selling my house in Cape Coral and have accepted two offers. On the first, on the 29th day of the 30-day inspection period, the buyer cancelled and got their deposit back. On the second, we got through the 21-day inspection period on a cash transaction no financing. On closing day, the buyers said they "changed their minds," and asked for the deposit back of $2,000. Can't I keep this?

-Gayle N.

Dear Gayle,

I have the pleasure of handling about 250 sales transactions each year, most of which close on the scheduled closing date without a hitch. However, situations like yours do arise, where the buyer does not follow through on their contractual obligations, at times causing great distress to a seller. What if you needed these closing funds to buy a new home, either here or out of state? So, to answer your question, you likely have the contractual right to keep the earnest money deposit. However, the buyer has to sign a cancellation and release prior to the escrow agent releasing the funds. If the buyer is uncooperative, you will have the option to pursue the deposit in court. Your contract also likely provides for prevailing party attorney's fees, but the process will take months or longer. And, you may not know whether your buyer is collectable if you did obtain a judgment. So, the additional question that should be asked how can I avoid this situation to begin with?

I always advise my selling clients to demand a significant earnest money deposit from their buyer. Assuming your house is worth $250,000, I would require no less than $10,000. Requiring a larger amount accomplishes two things: First, the buyer has the wherewithal to make a substantial deposit, making it more likely they will follow through at the end. Secondly, it will be harder for a buyer to "change their mind" when they will likely lose a lot of money. In essence, it is a lot easier to walk away from $2,000 than $10,000.

You may be wondering how to avoid an uncooperative buyer that won't sign the cancellation. Some of my sellers protect themselves by requiring the escrow money deposit be nonrefundable, and payable directly to the seller. With you, as seller, in possession of the money, the buyer can be as uncooperative as they would like, you have their money! Once they miss the contract closing date, you would generally be free to sell to another buyer.

Every seller's situation is unique, and the contract is the bedrock from which a successful transaction will grow. Always be sure to have the contract protect you in your specific situation. In this case, a much larger deposit, held by you personally, likely would save you a lot of aggravation, time, and money.

Eric P. Feichthaler has lived in Cape Coral for over 30 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 18 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.

Mr. Feichthaler can be reached at eric@capecoralattorney.com, or (239) 542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.

 
 
 

 

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