Of Real Estate Contracts and Return of the Down Payments: What You Need To Understand Beforehand
The steep rise in the value of commercial and residential real estate properties in the recent past has led to a concomitant upsurge in cases involving down payments. Litigation arises typically when the previously smooth and amicable transaction turns into a “finger pointing” fiesta after failures or refusals to close a deal.
A perfect explanation is as follows:
An eager house seeker first contacts a realtor, seeking a house of some particular specifications. But because the real estate agent knows it is mandatory for the prospective buyer to demonstrate the urge and will to buy, the realtor never bothers to go into the details of the meeting. The seller, however, has an anticipatory breach – permission that excuses the buyer from ‘tendering performance’ but doesn’t excuse them from not being “ready, willing and able to perform.”
Now, when things go south, and the “finger pointing” fiesta accelerates to the floor of the court, the eventual decision will squarely lie with the judge of the Appellate Division. The seller, fighting to keep hold of the prospective buyer’s down payment, argues on the basis of the three terms: “ready, willing and able to perform.”
The questions to be raised here, however, will revolve around whether the potential buyer of the said assets anticipatorily breached the contract. It will also apply if the purchaser knowingly, went against the seller and rescinded the deal before the closing day, or if in the event of the purchaser’s abandonment, the seller was still ready, willing and able to complete the sale of the agreed property. The seller may have obtained the relevant government approvals in anticipation of the agreed date of closing the deal.
However, there are some certain exceptions to this rule. First, the purchaser may have sought to cancel the contract ahead of any move by the seller. Maybe the notice was tendered in before any renovation works or seeking of the relevant government approvals. And hence, to get the down payment, the buyer will not be required to attend the closing of the deal.
The Typical Procedure for Contracting to Buy a Home in the state of New York
New York’s process of contracting to buy a property is unique from that of many states in the US. First, the buyer has to make a formal offer to the seller, expressing interest in purchasing a home. At the initial stage, nothing binds the two and they may walk away if the offer isn’t convincing. This is one of the reasons that real estate litigation is so common in NY.
However, once they sign a formal contract, or more specifically, be “in contract,” the process of buying starts. Signing it happens a week or two after the acceptance of the offer and with the acceptance of an offer is what’s known as the Down Payment – 10% of the purchase price. If, by bad lack, the buyer decides to turn down the offer, problems start.
Since a rescission order unequivocally demonstrates the accuser (or purchaser) intended to go against the initial contractual obligations, any happening before the agreed date of performance equals an anticipatory breach. However, when the seller doesn’t satisfactorily show how “ready, willing, and able to complete the sale” he/she was, the case of breaching of the contractual obligations is quashed.
Real Estate Lawyer Queens R.A Esq. 88-02 136th St Jamaica, NY 11418 (718) 206-1555 realestatelawyernys.com