BUYERS BEWARE!
Thème: Real Estate janvier 31, 2023 by Low Murchison Radnoff
Buyers Beware!
By David Debenham and Mark Addo
Emails: ddebenham@lmrlawyers.com
Homebuyers buy real estate at their peril, so don’t buy a house without a lawyer. If you have a lawyer get their advice at every stage of your purchase and for goodness sake follow their advice. Here is why.
A recent case [1] provides a cautionary tale for homebuyers. The homebuyers lost thousands of dollars in deposits and other payments to the home seller and never got their house. If you are a homebuyer, you can avoid such a costly mistake by hiring a lawyer, so you do not repeat the same mistakes.
Here is what happened.
The homebuyers purchased a newly constructed house from a developer for about $1.5 million. The homebuyers entered into an Agreement of Purchase and Sale (the “APS”) with the developer. While signing the agreement, the developer refused to accept any conditions in the agreement based on financing or mortgage approval. The homebuyers signed the APS anyway without any financing conditions because they were so anxious to buy the house.
The initial closing date for the purchase was on November 6, 2018. The homebuyers failed to close on that date and asked for two extensions, first to November 29, 2018, and to December 20, 2018, because they still needed to finalize their financing of the purchase. The homebuyers paid an additional $20,000 for each extension. On December 20, 2018, the homebuyers again failed to close on the house and defaulted on their purchase. The developers resold the house for about $ 1 million and sued the homebuyers for the lost difference from the original price. In total, the homebuyers lost their deposits and the property and were made to pay hundreds of thousands of dollars to the developer.
As a homebuyer, it is in your best interest to hire a lawyer when purchasing a property. A lawyer can review a new home agreement prior to signing or make it conditional upon solicitor review. Specifically, a lawyer can help a buyer include financial conditions in an APS that protects the buyer’s interest. A lawyer can also advise a buyer of the various issues in the APS so that the buyer can be aware and prepared. In addition, a lawyer protects your interest when they conduct title searches and review surveys, permits, and documents associated with a real estate transaction. As a buyer, you should be prudent and purchase a property you can afford. Protect yourself by including conditions in the APS so that you are not held liable if you default on the property. At the very least, be aware that the risk you are taking may cost you not only a home but also put you into bankruptcy.
Don’t just go to the real estate lawyer after signing the APS. Go to the lawyer before so that the lawyer can properly check the APS and help include conditions that protect you. Otherwise, buyers, beware!
If you are a homebuyer, seller, or contractor and have any questions relating to real estate, construction, and properties, please contact David Debenham or Mark Addo at:
[ssba]