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Legal IssuesRelisting without releasing
In a blog posted January 26, 2009, I discussed dealing with deposits in a failed transaction. In a reply, a member asked if a property could be relisted without obtaining a release.
It is always best when parties to a failed agreement of sale reach an agreement about disbursing the deposits and then sign a release. More often than not this is achievable. Many times, however, while it is clear that settlement will not occur, the parties have conflicting claims to the deposit. For this reason one party may not want to sign a release. Usually in these circumstances, the buyers only want their deposit back and do not seek to take title to the property. If that is the case, the seller can relist the property without a release, while the dispute over deposits continues.
It is critical in these circumstances that every effort is made to determine whether the buyer seeks to enforce the agreement of sale and require transfer of title. Ask the buyer’s agent: does your buyer merely want the deposit back or are they intending to enforce the sale and move into the property?
An agreement of sale is not a lien against real property (why do you think PAR’s Agreement provides that it may not be recorded?). While the agreement does not represent a lien, buyers can, if they seek to take title, file a lis pendens against the property which acts as an encumbrance and precludes sale by marketable title to any other buyer. We all know of the threat of lis pendens, but how many times have you witnessed it? For a buyer to record a lis pendens without any intent of taking title may represent slander of title and subject the buyer to a lawsuit.
Whenever a property is relisted without a release, a subsequent buyer before entering into an agreement, must be put on notice of the earlier failed transaction. This way, if buyer #1 does file a lis pendens, buyer #2 had reason to know of the possibility and will not likely have a failure to disclose claim against seller.
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About James L.: Jim Goldsmith, Esq. is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. |
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