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I am the seller. We signed the sale agreement on January 21. My agent says that the agreement was really executed when both parties received the signed agreement by email on January 22.
The inspection contingency clause in the agreement has the following two parts:
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Part A: The Contingency Period is 10 days from the Execution Date of this Agreement for each Inspection Elected in Paragraph 12(C).
Part B: Except as stated in Paragraph 13(C), if the result of any Inspection elected in Paragraph 12(C) is unsatisfactory to Buyer, Buyer will, within the stated Contingency Period:
1. Accept the Property with the information stated in the Report(s) and agree to the RELEASE in Paragraph 25 of this Agreement, OR
2. Terminate the Agreement by written notice to Seller, with all deposit monies returned to Buyer according to the terms of the Paragraph 23 of this Agreement, OR
3. Present the Report(s) to Seller with a Written Corrective Proposal ("Proposal") listing corrections and/or credits desired by Buyer. The Proposal may, but is not required to, include name(s) of a property licensed or qualified professional(s) to perform the correction requested in the Proposal, provisions for payment, including retests, and a projected date for completion of the corrections. Buyer agrees that Seller will not held liable for corrections that do not comply with mortgage lender or governmental requirements if performed in a workmanlike manner according to the terms of Buyer's Proposal.
a. No later than 5 days from the end of the Contingency Period(s), Seller will inform Buyer in written that Seller will:
(1) Satisfy all the terms of the Buyer's Proposal(s) OR
(2) No Satisfy all the terms of the Buyer's Proposal
b. If Seller agrees to satisfy the terms of the Buyer's Proposal, Buyer's Proposal, Buyer accepts the Property and agrees to the RELEASE in Paragraph 25 of this Agreement
c. Within 2 days of the receipt of written notification that Seller will not satisfy all terms of Buyer's Proposal, or the time stated in Paragraph 13(B)(3a) if Seller fails to choose either option in writing, whichever occurs first, Buyer will:
(1) Accept the Property with the information stated in Report(s) and agree to the RELEASE in Paragraph 25 of this Agreement, OR
(2) Terminate this Agreement by written notice to Seller, with all deposit monies returned to Buyer according to the terms of Paragraph 23 of this Agreement, OR
(3) Enter into a mutually acceptable written agreement with Seller, providing for any repairs or improvements to the Property and/or any credit to Buyer at settlement, as acceptable to the mortgage lender, if any. If Buyer fails to respond with the time stated in Paragraph 13(B)(3)(c) or fails to terminate the Agreement by written notice to Seller within that time, Buyer will accept the Property and agree to the RELEASE in Paragraph 25 of this Agreement.
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Facts:
(*) On January 28, my agent received the inspection report and she forwarded it to me by email four days later on February 1.
(*) On January 30 , my agent received the buyer's reply-to-inspection letter, which was forwarded to me three days later on February 1.
(*) Buyer sent me the termination letter on February 4
(*) On February 5, I replied to the buyer's agent that I was agreed about the repairs to the house that were requested by the buyer's reply-to-the inspection letter even though the Buyer sent me the termination letter the day before (on Feb 4 - see Paragraph above). Please note that my reply was within the stated time frame according to PART B (3a)..
(*) The buyer requests the full deposit as the termination letter is signed by me.
My understanding:
If I take January 22 as the day when the agreement was executed, the Contingency Period of 10 days was due on February 1st. I am not sure I should count calendar days or busines days in the State of Pennsylvania, so this is my first question to you guys?
If I understand Part B (above) of the agreement, the buyer replied to inspection within the stated Contingency Period and I was satisfied on Feb 5 with all the terms of the Buyer's Proposal to do repairs to the house, which was with the stated time frame according to PART B (3a). However, the termination letter came out a day before, on Feb 4.
I need to know the consequence(s) (if there is/are) of the buyer if he wants to continue thinking about terminating the agreement and walking out?
I think Buyer is in default and his deposit is forfeited to the seller (me) as liquidated damages.
my agent answered my questions and said that I didn't have the right to claim the deposit and the buyer can walk out, which doesn't make sense to me and this is why I posted the note here.
Honestly, just let it go and move on to the next buyer. It's not worth the headache or hassle for what is likely not a whole lot of money. The marketing time you lost is minimal.
Your bigger problem is an agent that doesn't send you documents immediately or the next morning if they are received late in the day.
Since it is not in the section you provided, elsewhere in the contract is probably a sentence that indicates if the contract uses calendar days or business days.
"My agent says that the agreement was really executed when both parties received the signed agreement by email on January 22. " Do you have this in writing?
"Part A: The contingency period is 10 days."
"Part B: [See below]. ...Buyer will, within the stated Contingency Period:...2. Terminate the Agreement by written notice to Seller, with all deposit monies returned to Buyer [see below]"
BUT...what is the "Part B: Except as stated in Paragraph 13(C)" exception?
AND...what are the "with all deposit monies returned to Buyer according to the terms of the Paragraph 23" terms?
Just food for thought and prep for when you speak with your atty.
However, as a general course of action -- if a buyer wants to walk, it's almost always a no-win scenario to try to force them. They will always find some niggling little detail that they can claim wasn't executed properly, and the fact of the matter is that they simply do not want to the house anymore. From what you describe, it certainly appears that you were working within the precepts of the contract. I'm a little quizzical about your agent's assertion that the contract wasn't binding until the buyers received a copy of the signed sales contract -- around here, it's a binding contract as soon as the other party signs. But again, that kind of detail is a question for an attorney.
Depending on the amount of the deposit, though, it's probably not worth it. If you force this sale and perform the repairs, i can almost guarantee the repairs will not be found to be 'acceptable.' I'm sorry, I know it's disappointing. On the other hand, now that you've had an inspection (paid for by someone else!), you have a laundry list of projects that you can work on so you won't have this issue with the next buyer. And you don't know -- perhaps the other buyers have had something happen in their personal life. We had a contract a few years ago once where the inspection was great, everything was going smoothly, and then on the last day of due diligence, the buyers withdrew -- she had been pregnant and lost the baby the day before, and they were distraught at the idea of moving into their "family" home without their family. Our seller released the earnest money, and we sold it again in a week.
If your agent is correct (and this is most likely the case) he/she should be able to go thru it step by step, showing you in each case where the contract describes what, when, and why things happen the way he/she claims. The way time periods are calculated is a good example. I have to believe that your contract spells that out but you obviously haven't seen that section yet. You have every right to understand your contract and, while your agent is not an attorney, he/she should be able to show you all of the sections of the contract that come into play and how they apply to your circumstances. Obviously, you are not satisfied yet and it is your agent's job (and more than likely, desire) to be sure that you are satisfied with your understanding.
Then, if you still can't see it, consider calling an attorney. My guess is that you aren't in need of an attorney yet but that's, as always, solely your choice.
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