Over the years, we’ve seen many buyers default on Florida real estate contracts in various ways. When this happens, the seller can be left confused about what comes next. If you’re a seller, you might be asking:
- What are your rights as a seller?
- What compensation can you gain?
- Can you sue the buyer?
- Should you start again with a new buyer?
- Is it all over with this buyer?
- What about the deposit?
Every real estate contract is unique. All your concerns can be resolved with the help of a Florida real estate attorney. In this blog, we’re going to give you the lowdown on what happens if a buyer defaults on a Real estate contract in Florida:
What Is a Defaulted Real Estate Contract in Florida?
Defaulting on a real estate contract in Florida occurs when the buyer or seller fails to meet the contract and agreement terms. To avoid defaulting the contract, the buyer must have genuine reasons or contingencies in place for why it’s hit a roadblock.
Any contingencies in a real estate sales contract must be clearly defined with deadlines. Contingencies allow the buyer to change the contract terms or get out of the real estate contract in Florida without consequences.
For example, if there is a radon inspection contingency, the buyer can test for radon on the property. If radon is found, the buyer can either negotiate for it to be removed or cancel the contract. In this scenario, the buyer would not be in default.
Examples of a Buyer in Default:
- Failing to put the good faith deposit into escrow before the deadline.
- Canceling the sale after removing all contingencies or without a cause permitted in the contract.
- Failing to remove contingencies before deadlines.
- Failing to complete loan paperwork before the deadline.
- Failing to return signed disclosures before the deadline.
- Failing to bring ‘good funds’ to the escrow on time for closing.
- Financing fails when there is no financing contingency.
- Getting no insurance.
- Failing to bring the required documents to the settlement.
- Failure to attend a settlement.
What Are Your Options?
If a buyer defaults on a real estate contract in Florida, a seller is likely to get upset and start threatening that they’ll sue the buyer for damages. They might even try to force the buyer to purchase the property.
In reality, that’s not always how things work. In Florida, real estate law requires sellers to choose from alternative remedies.
If a buyer breaches the real estate contract, a seller’s options include:
- To close the transaction
- Seek specific performance of the agreement
- Seek monetary damages for the breach.
Choosing to sue for the breach of the sales contract is usually referred to as a remedy ‘at law’. While asking the buyer to go through with the purchase is called a remedy ‘inequity.’
As a seller, you must choose between these routes. However, you should always consult with a Florida real estate attorney first. These blogs are for introductory educational purposes, but always speak directly to a lawyer for advice relevant to your unique circumstances.
Retaining the Deposit
When a buyer fails, refuses or neglects their obligations in a Florida real estate contract, including the payment of the deposit, then a seller may be able to recover the deposit which was paid or agreed to be paid. Or, they can seek to ‘proceed in equity’ to enforce their seller’s rights.
Which, in short means, they can ask a court to force the buyer to follow through with the contract. That option tends to be a drawn-out, expensive and uncertain lawsuit.
If a seller does opt to retain the deposit, it is first important that they are sure the deposit amount is sufficient to cover any actual damages they are likely to incur if the buyer fails to close.
Abandonment of the Contract
In most cases where a buyer defaults on a real estate contract in Florida, it’s obvious that the deal is not going to close. The buyer is either unwilling or unable to close in most cases – either because they’re unhappy with inspection results or because their financing plans fell through.
However, we’ve also seen cases where the seller is left unsure of what is happening. The buyer’s communication may be unclear, contradictory or simply silent.
Florida’s real estate rules allow sellers to be able to claim that the buyer has abandoned the contract, if – a buyer fails to fulfill their obligations under a contract, or fails to take the necessary steps to complete a deal.
The Florida Supreme Court has a reputation for recognizing that a buyer has abandoned a contract by going silent or allowing too much time to pass. See, for example, Kuharske v. Lake County Citrus Sales, 44 So.2d 641 (Fla. 1949).
What to Do If a Buyer Defaults on Your Real Estate Contract in Florida?
Contact a Real Estate Contract Attorney in Florida
If you’ve hit a stumbling block with a pending Florida real estate contract, or if you believe a buyer has defaulted on the terms of the contract, then you have various legal and equitable remedies available.
We understand that knowing whether you should seek to enforce the sales contract, file a lawsuit, take the deposit, or whether to buy out of the contract is a tough decision. Each one has pros and cons, legally and financially.
We always advise anyone in these situations to receive a free consultation with our Florida real estate contract attorneys. Firstly, we’ll assess whether the buyer has actually defaulted or breached Florida real estate contract. Then we’ll assess your unique situation, your goals, damages and help you decide which path is best, before helping you take the necessary action.
It’s also a good time to mention that planning ahead with a legally watertight real estate contract can protect you in scenarios like this.
Contact Us for Free Consultations
Our real estate attorneys at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience that can help you through these tricky moments, reviewing your document and advising you on the next steps to secure your transaction.
Contact us today for a free consultation.