The definition of remorse is a deep regret for a wrong commitment. In other words, you said, “I do” and the next day decided “I don’t.”
When it comes to real estate commitments, it can be a little more complicated than personal commitments, at least when it involves money.
Buyer and seller remorse is fairly common and sometimes leads to the end of real estate deals. In today’s fast-moving market, buyers are jumping at practically anything with a front door and a couple of bathrooms. This can lead to making the wrong decision both financially and personally for you and your family.
There are consequences if a buyer is remorseful and breaches a contract of sale after all parties have signed and the appropriate cooling-off period is ended. This is usually three business days, while the attorney review usually takes five business days. To begin with, the seller may be entitled to the earnest money that was put down at the time the contract was signed. Depending on the culture of the area of the sale, this is generally 1% to 3%. But in today’s market, that amount can be far higher, making it that much more difficult for a buyer to back out.
In addition, sellers can sue for damages if the buyer’s actions have caused personal and monetary inconvenience. The worst case would be the seller suing for specific performance or demanding completion of the transaction. However, generally in a situation like this, especially in this market, the seller would just accept the earnest money and put the property back on the market.
Sellers, too, can have remorse for the same reason – a fast-moving market. There is a lot of incentive to sell a house today. Selling prices are at an all-time high, certainly the highest in many decades, and sellers feel the pressure to cash out and move on. The problem comes when there is nothing to move on to, which is when the remorse moves in.
Again, after the review deadlines are gone, a seller breaching the contract may be more complicated. Buyers may have already put their lives in motion in their new home. Enrolling kids in school, accepting a new job and setting up movers all are considered if the transaction ends up in court.
Sellers, of course, should offer to refund the earnest money and reimburse any of the buyer’s expenses incurred because of the cancellation. Buyers can still sue for damages or specific performance, again forcing completion of the sale, but good luck with trying to get someone to move out of the home who doesn’t want to.
On another note, there has been a task force organized by the Florida Bar with recommendations relative to condominium association regulations. This has been sent to the governor and includes tightening up reserves with an eye towards potential future repairs, engineer inspections and mandates, and owner voting regulations, to name a few. This task force is the result of the tragic collapse of the Champlain Towers South in Surfside and in general the age of Florida condos. More than 912,000 condo units in Florida are at least 30 years old, according to data from the Department of Business and Professional Regulation, and all may be at risk.
As far as buyers and sellers, none of the above options are good and the best way to proceed with a contract of sale is to make sure this is the best choice for you. Once you have made a contractual commitment, whether you’re a buyer or seller, “remorse” can be a dirty and expensive word.
