Real Estate Blog - HOW TO GET OUT OF A CONTRACT - BY DALLAS REALTOR BILL CHERRY

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HOW TO GET OUT OF A CONTRACT - BY DALLAS REALTOR BILL CHERRY

I supposed it's always been there, but maybe I either didn't notice it or my clients were, in the main, all above it. I suspect it's a smidgen of both. But I've started to notice it lately with startling frequency, especially in the Question and Answer section of our nearly 43,000 member Active Rain blogs. Here it is:

"How do I break my contract without cost or repercussion to me?"

Yes, that's it. "How do I get out of my earnest money contract?" or "How do I get out of my lease? It has four months to run." I've noticed a plethora of post like these in the Question and Answer section of Active Rain.

And I admit that my blood boils when I see them, not because of the question, but because of the answer that is usually given.

It's, "See an attorney right away."

They don't need to see an attorney. They don't need to see their minister. The answer is simple. Here it is. It's very straight forward:

"You don't," followed with "Why would you think you should or could?"

"Well there must be a way." OK, if you insist, here it is:

RULE 1. HOW TO BREAK A CONTRACT. If you want out of your contract, you offer to buy it back. That's right, you contact the other party and you say, "I no longer want to do what I said I would when I executed our contract. Would you please sell me your position in it in consideration for the imposition I am putting you in?"

If the price quoted is acceptable, write your check. If it's not, you abide by the terms of the agreement. That's totally as it should be.

"There are enough weasels already out there without adding you to the list."

Posted by BILL CHERRY on 08/13/2007 06:50 AM

Comments (19)

breaking a contract

Originally posted at: BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG: HOW TO GET OUT OF A CONTRACT - BY DALLAS REALTOR BILL CHERRY

Post is included in group: Realtors®
Post is included in group: Posts to Localism

19 Comments on HOW TO GET OUT OF A CONTRACT - BY DALLAS REALTOR BILL CHERRY

AUG

2007

Well said. Written contracts came into existance because someone a long time ago broke their WORD. We live in a day where it is common to lie and common to break commitments. Our society has suffered because of it.

If you don't keep your word, how can anyone trust anything you say or sign?

You made me think of something....

I wonder what percentage of folks break their apartment lease to get into a home?

When we purchased, our apartment complex had 'written into the lease' that you could break the lease if you were a first time homebuyer.... and that was the ONLY reason. I thought that was pretty cool. And apparantly it was unique. I haven't seen anything like that since.

Bill, Great post! I had a couple who did everything they could to get out of a contract. I had the sellers, buyers were represented by another party. They didn't ask to be "let go" they asked for us to extend the closing for a year without additional consideration so they could resell it. They started all that with a "letter from their attorney". My sellers freaked out! We didn't let them so they followed that up with and inspection and 2 re-inspections. It really became a contest to see how they could top being a bigger jerk than before. Long story short, they bought. 2 days later Wilma hit so they got to repair damage from that hurricane...but there's more. Come to find out the new wife found out the old wife was living down the street and that's why they didn't want to purchase. Had they come out with it or at least had been nice about wanting to back out instead of being such ruthless pigs, we probably would've let them off the hook and all that damage would've been ours to repair and our market time on that house would've quadrupled. Every time I drive by that house I wipe my forehead!

Good post Bill---I hope you posted this on Localism too.

Bill, it's amazing that no one ever said this before! Stick to your obligations. A novel thought. Well put.

Well said, Bill . It boils my blood too that people sign contracts and then a few weeks or months later, after the listing has been off the market due to having an accepted offer against it, decide they no longer want to be under contract to close on that property. It has only happened to one of my listings (and I have never worked with a buyer who decided to do this ) and fortunately we were able to find another buyer within days for more money than the original buyer was willing to pay. In my situation the buyer and their agent left us hanging til closing day...low and behold the buyer could not be found, not by their lawyer, not by their agent, etc. Two weeks later the buyer showed up looking for their deposit back.

I like the first time home buyer provision in Tom's lease. That's a wonderful and classy way to do business.

What bothers me the most is not so much that a person changes his mind, it's when he changes his mind and wants it to be at everyone else's expense but his own.

Lawyers have figured out how to rationalize their own behavior in deals like this. They claim their job is only to be the client's advocate, not to take any responsibility for telling them he doesn't participate in acts of weaselness. So the attorney cash register goes cah-jing as usual. (And they want to know why their profession is held in disdain by so many.)

Bill,

I think I have also chimed up on a bunch of those questions you are referring to. I agree that people need to stop concentrating so much on getting out of their word. There are times when things are a little different (unexpected issues brought up from the inspections and such), but often buyer's remorse is used as some sort of weapon. I ALWAYS remind my buyers that they are entering into a contract, and based on that contract, others are making plans and entering into contracts as well.

Hi, Lane --

Thanks for taking the time to join in.

There's also another issue that we seem to gloss over. Why would we attempt to help people do the wrong thing, especially when it not only hurts their counter-part in the contract, but a couple of Realtors like us as well?

That's just plain inconsiderate, if the truth be known.

Excellant post Bill...I rated you a 5

I see so much attitude these days. The attitude that we can say or do whatever works...with no responsibility to follow through!

A contract is a contract...whether it be Marriage, Real Estate or Business. One should enter it with only the best of intentions!

Miss Joan, it honestly blows my mind! These are the children of people like my friends. How in the world did they let them think this kind od stuff is OK? More Dr. Spock? Their parents weren't/aren't like that!

It this kind of attitude from people that are now fond of "starter marriages". If our word is no good then what do we have left? Unfortunately, I am seeing this behavior in my generation way too much.

Now, Miss Ahley, I don't know if we are kin or not, but we're surely on the very same wave length. I love it...."starter marriages." I hadn't heard that very accurate description.

APR

2008

Excellent posting, Bill.

Bill, I followed the link to your site from another post and this blog could not have came at a better time for me! I sold a new home 2 weeks ago, set to close the 11th of April. My buyer called last week, wanting to know how he could get out of his contract. I told him legally there was no way out and my job was to protect him from a lawsuit. I assured him that the only way to protect him, is to show up to close with him. He wanted to pay the builder $100 a day to walk. WHAT? No go. I told him he was in a legal binding contract and we'd proceed to close. He emailed me today, waving the white flag and we are going to close Friday! Great post. Elizabeth www.Huntsville-Realestate.com

Good for you, Miss Elizabeth! I'm very proud of you. Wish we worked together.

Your new friend,

Bill

APR

2008

I am not a realtor or attorney but am someone who was trying to buy a home and had the seller want to void the contract--about 3 days after they accepted our earnest money contract their agent called mine and said the seller's young adult son had been taken ill the day before and after a long night in the hospital his doctors said he had a brain turmor. They wanted to pull the house off the market to deal with his situation.

The home inspections were just scheduled to be done but we did not forsee any problems--we had every intention of buying the home and probably paying cash...our real estate agent who has been in business more than 20 years told us that there is really no way to make someone sell a house if they don't want to==my husband said it was not worth going to court for performance...so we just let them out of the contract w/o asking for proof (which my husband said was offensive) or monetary compensation to "buy" our position...

but we have not found one we like as well and are still looking...

JUN

2008

I am selling my own home as the listing agent as I am a seasoned RE/MAX agent. We received a full price offer and accepted it immediately (in this market!) The buyer is represented by a RE/MAX agent from another town/office. Long story short, buyer waited until day 7 of a 10 day option to inspect and amend contract to a price 10k less than original offer 10 minutes before the midnight deadline. He sent me the amendment with a handwritten letter directly to me without his agent knowing. Very strange. We accepted the offer and option ended. Finance Addendum was for 10 days, and he was approved by Chase. We were to close appx. 45 days from contract execution. The buyer was not returning his agents calls, etc., to sched a close time. So I became nervous about the closing. The lender (Chase) told the title company all was well and appraisal was over sales price. Then, just today, the buyer told his agent he had been laid off as there we "mass layoffs" within his co. A different story was given to the lender. His vm is still working and there have been no public reports of mass layoffs within his co. We are going to verify employment in the morning. He is wanting to extend the close date (without remedy) in order "to find the right job" for he and his fiancee. Need-less-to-say, he is a first time home buyer in his late 20's and it all seems very fishy. My family is set to move Friday to a lease we signed and are obligated to for 12 months. I am devastated and will be out a lot of money (we are broke as it is, hence the reason we are leasing). If the buyer is lying about his layoff, I will seek all and any legal action under Paragraph 15. Any advice? Any good RE attorneys to refer? Thanks....

Stacey,

This kind of stuff makes me crazy. It really does.

I'm going to give you my thoughts as a businessman/Realtor. I am not an attorney, so please don't think of this as legal advice.

I don't know any attorneys where you are, but I believe you need to stop all oral communications with this guy, his agent, his lender, and anyone else that's sticking their nose in this. Also don't write any letters and don't sign any more extensions, modifications, etc.

RIGHT NOW: Get the best-known litigator in town to write him a letter and send copies to the title company, the other Re/Max agent and the Chase lender. The letter doesn't need to be more than one sentence long. Something like this: "This is your notice that you are to perform as you agreed to in the contract dated XXX and all amendments thereto, no later than the close of business on the agreed-to closing date of xxxxxx; otherwise I have been directed by my client to seek all remedies against you that are provided for by law."

Be sure to show up for the closing whether he does or not.

Good luck. Let me know how it turns out.

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