I feel fortunate and even blessed that my clients have been compassionate and fair during the current crisis. There are people who have suddenly and unexpectedly lost their jobs through no fault of their own. They may have to cancel the purchase of a home. The purchase agreement may involve non-refundable earnest money or earnest money no longer refundable.
Yes having a buyer back out of a purchase is a huge inconvenience to a home seller who may be out money, and may even have to cancel the purchase of a home they were going to buy. There are things that happen to us through no fault of our own that we don’t have control over and could not have prevented.
A worldwide pandemic is inconvenient for all of us and has changed our plans for today and for the immediate future.
“Force majeure refers to unforeseeable circumstances that prevent a person or company from fulfilling a contract. The term means ‘superior force.’ We also use the terms irresistible force, vis major, cas fortuit, or casus fortuitus with the same meaning. Cas fortuit and casus fortuitus mean ‘chance occurrence.’”
I can’t imagine what it would be like to lose a $5,000 or $10,000 earnest money deposit while facing unemployment because a seller insisted on enforcing the contract and keeping all or part of the earnest money.
Right now everyone is inconvenienced and all of our plans have changed and it isn’t anyone’s fault. The good news is that houses are still fairly easy to sell. A couple of days ago we had a buyer cancel a purchase and we were able to get a new purchase agreement signed a few hours later with a different buyer.
If you are in a position to be kind to someone else please do it even if the contract says you get to keep the earnest money. Chances are when the contract was signed neither party anticipated that businesses would close or that jobs would be lost.
Going forward real estate contracts will be updated to include language about pandemics.