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Repercussions from coronavirus impact home sale

March 20, 2020
By ERIC FEICHTHALER - Real Estate Law , Cape Coral Daily Breeze

Dear Mr. Feichthaler:

I entered into a contract three weeks ago to buy a house in Cape Coral. Cash deal, no contingency for financing, $10,000 deposit. It is supposed to close next week. Due to the coronavirus and its impact on the stock market, my investments have left me in a position where I, literally, no longer have the money to purchase the house. Can I get out of this contract, and get my $10,000 back?

- Wallace T.

Dear Wallace:

It has been devastating to receive several inquiries like yours over the past week. We find ourselves in truly uncharted waters in our nation, and so many will be negatively impacted by the events of the past month.

The standard Florida real estate contract contains a "Force Majure" clause, which is also commonly referred to as an "Act of God" clause. In certain situations, when one of the parties cannot perform their obligations under the contract, they may be able to postpone or cancel a contract altogether. Although "Pandemic" is not specifically under the defined events that would allow for a delay or postponement, it is likely that this would be considered a "Force Majure". The Florida clause provides that, for instance, if certain services are unavailable (law firm, lender, government recording offices, etc.), the parties will not be liable for damages caused by the delay. If all professional services, transportation and other services are in place, financial harm may or may not qualify for the relief in the contract to be in effect. In our community's current situation, banks and other professional services firms are open. The standard clause provides the time to close will be extended up to 7 days after the "event" stopping the transaction is over. If the "Force Majure" still is occurring 30 days later, making closing an impossibility, either party can terminate the contract.

You will want to confirm that you are still not within the Inspection Period provided for in the contract. If so, you can cancel now by right. Given the timeframe you specified, you likely are beyond that date.

Your first step? Reach out to your Realtor if you have one, or directly to the seller if you do not. There are many times where a seller will understand the unique situation being faced, and may agree to return some of all of your deposit, and agree to a cancelation. If you ultimately do not reach agreement, there is potential for litigation over both the deposit, and the requirement you purchase the property, if the seller has a right to demand "Specific Performance" from you. This is a legal term meaning that you would be forced to purchase the property through order of the court. If you no longer have the funds, that may not be in the best interests of the seller, since, where will the money come from to buy it?

Every transaction is unique and may have different options available. You may want an attorney to review your specific contract to determine if there are additional options to those noted above.

And, as a note to all of our readers and their families, there are better days ahead. I wish you all excellent health over this challenging time, and I hope this will give you the opportunity to cherish the additional time with your family.

Eric P. Feichthaler has lived in Cape Coral for over 30 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 18 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.

Mr. Feichthaler can be reached at eric@capecoralattorney.com, or (239) 542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.

 
 
 

 

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