The last buyers to back out from the sale of our townhouse did so about 4-5 days before closing when they technically had exhausted their “standard” (and valid) options to back out. So until now we have refused to sign them out of the deal. The main reason is they are the third buyers to back out and since they did not have a valid reason, legally we have the right to at least some part of the earnest money for them holding the house (and us having to pay mortgage) for an extra month.
Technically speaking, and according to my agent’s attourney, if we did go to Interpleading (the arbitration-like process where the faith of the earnest money is decided), there would be a very good chance we would win. But overall, the process would eat up several months and the attourney fees would eat up a good chunk of the earnest money.
So in the interest of being more expedient and fair, we offered the buyers to let them out of the deal for half the earnest (which covers slightly more than the mortgage for the month). They have of course refused this option.
Now, I have heard back from them through my attourney. They are saying that since I am also the treasurer of the HOA for the townhome association, that I mis-represented the financials and that they will counter sue me, all the other board members, their mother’s, cats and dogs,…. Well you get the idea.
So both me, my wife and our agent are “beyond pissed” at the situation. They are being total jerks and unreasonable. We gladly gave them an extension on the closing date when they asked for it. Gave them updated financials when they asked for it (which is their basis for the “fraud” claim). Realistically, if it goes to court, there is a 90% chance I would win but it will be a real pain in the behind. But on the other hand, I think that even if the attourney fees eat up all of the earnest, I’d want to go through it for the principle.
Still not sure which path I want to take. All I want is for them to cover the lost mortgage costs for the month they put our house on hold. Does not seem unreasonable considering they had no real grounds to back out based on the standard realestate terms.