Real estate brokers say deals that were being processed are posing all manner of issues with the onset of the pandemic, causing chaos in the market as investors want to pull out of contracts. But should purchasers cancel because of COVID-19? Real estate attorneys have said there’s no straightforward response.
A Palm Beach Post article tells the story of a real estate agent representing a client with a deal to sell a $3 million home in Boca Raton. After the pandemic became a major issue, the buyer wanted to renege on the deal. The sellers hired legal representation and the buyer was told that the seller would proceed with legal action if the buyer did not follow through with the purchase.
With the advent of the pandemic, real estate brokers say sales that were in the works are posing all manner of issues, triggering industry havoc. Purchasers seeking to pull out of sales arrangements are the biggest challenge.
There is a clause called force majeure in a widely used contract created by the Florida Association of Realtors and the Florida Bar, nicknamed FAR BAR. The Latin term means an unforeseeable action which prevents a contract from being fulfilled by anyone. The agreement mentions God’s acts, such as storms or flooding. It does not, however, list pandemics. The action needs to last 30 days in order to genuinely unwind the deal.
In return for letting them walk free, certain buyers concerned about dropping home prices, or who may not believe they will be able to afford a mortgage because of the economy, will be able to enter into an arrangement with sellers to surrender deposits.
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