Buying a home is not just a promise. It’s the law.
Real estate contracts are legally binding, explains real estate agent Kenville Prince of Prince and Associates in Bay Shore. “You have agreed to this transaction,” said Prince, who served as both a buyer’s and seller’s agent. “You can’t just say, ‘I don’t want to.’ “
This is why it is important to have a good real estate attorney who is familiar with local laws. When you buy a home in New York State, the law requires you to hire a lawyer to negotiate the sales contract and represent you in the closing.
“Most deals fail because someone hired their cousin who is actually a criminal defense attorney, not a real estate attorney,” said Alexis Siegel, associate real estate agent in Douglas Elliman’s Port Washington office who worked in corporate tax law.
But even with the best lawyers, contracts crumble. One reason is a low rating. “A contract depends on it,” says Prince. “The deal can fail if the valuation falls short.”
Mortgages can also cause problems. “After you get pre-approved, your circumstances must remain the same,” says Prince. “Buyers think they can buy furniture, but you can’t because your debt-to-income ratio will change.” Quitting a job, even for a better job, would also affect the situation, he added.
The situation on the seller side must also remain stable. “The house has to be in the same condition as the buyer made the offer,” says Prince. “There cannot be a new hole in the roof or a new plumbing problem.”
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Some extreme circumstances can also invalidate contracts. “If the person responsible for the house dies, the contract could be terminated,” says Siegel.
What buyers should know when a contract fails
Another offer
“If it is a hot property, then we take the next offer on the table,” says Prince.
Just make sure the original contract has been invalidated, Siegel adds. “You can’t show a house or put a house back on the market with a binding contract,” she says. “As an agent, I would 100% ensure that the original contract was void.”
Legal action
Getting out of a contract is difficult, especially when there are no contingencies. Siegel says there are legal options, but they are complicated. “A buyer can try to force a seller to close, and a seller can try to force a buyer to buy,” she says. “Lawyers get involved and a buyer may need to rent a house.”
Back to the market
“The house goes back on the market several times,” says Prince.
From Lara Ewen
Newsday special