Steeg Law attorney Richard Traina recently helped California buyers of New Orleans real estate avoid litigation alleging that the buyers breached the agreement to buy or sell.
Transaction Contingent on the Sale of a Condominium
The buyers wanted the transaction contingent on the sale of a condominium unit in San Francisco. The contract provided that the buyers “have signed listing agreement, intending to list their condo [in San Francisco] on March 5, 2022.” The buyers signed a listing agreement for the San Francisco property on February 10, 2022, but the property’s listing status was not “Active” in the San Francisco MLS until April 13, 2022.
The San Francisco property did not sell before the closing date on the New Orleans property, so the New Orleans transaction did not close. The seller sent a demand letter seeking specific performance or damages, alleging that the buyers breached the agreement to buy or sell because the San Francisco property was not “Active” in the MLS until April 13. Richard provided the seller’s counsel with the listing agreement and pointed out that the contingency language stated nothing about the San Francisco property’s MLS status; it merely provided that the property be listed. After receiving Richard’s letter, the seller backed down and signed the cancellation of agreement to purchase.
The Lesson for Buyers and Sellers
The lesson for buyers seeking a contingency for the sale of other property is to keep the contingency language as broad as possible in case the other property does not sell. For sellers, be specific with the contingency language. If, as a seller, you want the other property to be “Active” in its location’s MLS, make sure the contingency language says so.