Replies to This Discussion

Permalink Reply by Claudia Pearson on February 24, 2010 at 9:38am

Well I guess the moral of the story is to not execute a second "back up" contract.

Moreover, based on what you all have said, even though the seller might think they have another buyer bound to a contract, if the buyer can't enforce the contract, neither can the seller.

Too bad. Would have liked to close this sale.

Permalink Reply by Steele V. Propp on February 24, 2010 at 10:07am

Be patient. You never know how this will turn out. Buyers fall out all the time.

And maybe something better is out there.

Permalink Reply by Claudia Pearson on February 25, 2010 at 2:32am

You are correct that as communicated by BofA to the seller or his agent, the counter would be a counter to the seller's offer to release the encumberance, but when the seller communicates the BofA counter-offer to the buyer, it is both a rejection of the existing contract (for insufficiency and failure to meet the contingency) and a new offer to the buyer, which in this case, the buyer rejected by then making a counter-counter offer at a lower amount.

The legal question is whether the seller can accept that counter-counter offer and enter into a new contract if there is already an existing enforceable contract with the second buyer. According to you, they can because the fully executed contract with the second buyer is not enforceable in this situation. I'm not so sure, but then I'm not an expert.

As I said, the moral of the story seems to be to not execute a second contract but rather to let the seller hold the offer for as long as the second buyer is willing to let the seller hold the offer.

The problem with that is too many buyers walk, so having an executed contract at the very least appears to give the seller and agent(s) a bit more security and tie the second seller to a commitment.

I'm no longer sure it does.

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