There is a clause on Page 4 of the standard Minnesota Association of REALTORS Purchase Agreement titled “DEFAULT:”
171. DEFAULT: If Buyer defaults in any of the agreements hereunder, Seller may terminate this Purchase Agreement
172. under the provisions of MN Statute 559.21. If either Buyer or Seller defaults in any of the agreements hereunder or
173. there exists an unfulfilled condition after the date specified for fulfillment, either party may cancel this Purchase
174. Agreement under MN Statute 559.217, Subd. 3. Whenever it is provided herein that this Purchase Agreement is
175. canceled, said language shall be deemed a provision authorizing a Declaratory Cancellation under MN Statute 559.217,
176. Subd. 4.177. If this Purchase Agreement is not canceled or terminated as provided hereunder, Buyer or Seller may seek actual
178. damages for breach of this Purchase Agreement or specific performance of this Purchase Agreement; and, as to
179. specific performance, such action must be commenced within six (6) months after such right of action arises.
The gist is that if either the Buyer or Seller fail to fulfill their obligations as required in the Purchase Agreement, either party may sue for damages (aka money) or for specific performance. In some situations the Buyer gets cold feet and decides to walk away – typically a seller will simply negotiate to keep the buyer’s earnest money and relist the house to solicit a new buyer. However, in some cases the Seller’s preference may be to take the Buyer to court to make them close on the sale. A Buyer may also sue in the case where it is the Seller that refuses to honor the contract.
While going to court may be a costly and lengthy route to go, it is still an option provided in the contract and both Buyers and Sellers should be aware when signing Purchase Agreements they are making a legal contract that does have consequences!
I am not an attorney and this is not legal advice – whenever this kind of situation comes up it is important for the customer to speak with their agent & agent’s broker but to also enlist the advice and counsel of their own attorney.
