If a property is under contract to close and the buyer notifies the seller that they will be unable to close, can the seller re-list the property and accept another contract?
It is a difficult question to answer without some caveat.
When this situation arises it is always best to consult an attorney for legal advice because each situation is different and even the slightest change in the fact pattern can alter the attorney’s advice. But in most cases the seller may re-list the property if it is clear that the buyer does not intend to complete the transaction. This should be confirmed in writing. A seller has a duty to mitigate damages, so if the buyer defaults or terminates the contract, the seller has a duty to attempt to sale the house to reduce potential damages.
The parties are not required to resolve the issue of disbursement of earnest money prior to the property being release. If the parties want to terminate the contract and fight over earnest money they can do so. One do not affect the other.
A seller should use extreme caution in relisting the property when the the buyer is still asserting the right to purchase the house. For example, if the buyer notifies the seller that their loan was denied but they already have another lender, the seller should not relist the property without receiving advice and counsel from an attorney. If the buyer can properly assert a right to purchase the property and the seller accepts another contract the seller could face a lawsuit for both buyer. A Lis Pendens would likely be filed encumbering the property.
The Central Carolina REALTORS Association Contract Committee is currently working on a new release form that would allow the parties to sign a document confirming the contract has been terminated. Part two of the document would then ask if the earnest money is in dispute or if the parties have agreed to release the money. Hopefully, this document will clear up some of the confusion.
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