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Buyer Beware

Pictured home: 338 Nanaiakea St. Hilo

A real estate transaction is generally expected to flow according to the terms established in the “four corners” of the purchase contract. Expectations of the buyer and seller are clearly established according to the timelines set forth in the contract. Generally speaking things sort of go like this; buyer views property, there’s an offer and acceptance followed by a loan approval, termite inspection, survey and final walk-thru, signing and finally recordation.

Buyers’ Rights

Outside the contract, the buyer might ask the seller to clarify terms reflected on the disclosure or for repairs as a result of their inspections. Remember, sellers are not required to make repairs or renegotiate at any time following acceptance. A dissatisfied buyer can cancel without penalty as long as they do so within the contractually established timelines. Otherwise, the buyer is expected to perform according to the terms of the contract.

Buyers generally feel assured (albeit perhaps wrongly so) that no sanction other than the possible forfeiture of an initial earnest money deposit would be imposed even for a default just prior to closing.

What if…

Picture this. Buyer has loan approval or even stronger, paying cash. Seller relies on this commitment and begins the closing process. One owner closed their business and relocated to the mainland after the buyer received loan approval. Termite inspections and surveys are ordered. Homes are fumigated, household goods are packed and sold, rental deposits are paid and perhaps the Seller moves forward with another purchase. Moving vans are arranged, temporary lodging is arranged, cleaning services are hired, etc, etc. Buyer and seller sign all closing documents and recordation is set.

Buyer has a sudden change of heart. They begin making new demands or worse, they want to cancel the contract. Even forfeiture of a healthy earnest money deposit may leave the seller with a huge shortfall, not to mention turning the seller’s world entirely upside down.

Sellers’ Rights

Certainly, in today’s market, most sellers rely heavily on promises made and contractual commitments. Buyers in default are well advised to consult their attorney who will likely explain that the seller may have other remedies including compensation for costs and damages resulting from the buyer’s breach of contract. Even with a compelling reason for a last minute cancellation, the most compassionate sellers may not be willing or able to forego seeking compensation for last minute broken contractual obligations.

Bottom line is this; buyers are best to beware before breaking their last minute real estate promises!

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About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at denise@hawaiilife.com or via phone at (808) 936-5100.

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