Seller Breaches Sale Contract

[Frazer Joseph Gibbs]

Currently dealing with a situation where a family member is buying a home.

Seller agreed to sell. Buyer invested in an inspection and appraisal. Earnest money is held by lawyer.

On the original day of closing, the seller revealed there is a tenant still in the property and the closing was postponed. The same tenant agreed to vacate at the start of the sale process (in August) and now has suddenly changed their mind and is refusing to vacate. The seller has refused collecting rent for this entire time.

Cash for keys has been offered and tenant is refusing that too -- we're all hypothesizing there is some sort of non-traditional tenant/landlord relationship that has been had but the seller isn't giving details.

The home is owned outright and the tenant has been served notice of suit for dispossesory by the courts. We are still waiting on a court date.

Each month, an extension of the original sales contract has been agreed upon and signed by the buyer and seller.

My concern is what happens to all the money the buyer has invested if for whatever reason this deal does not go through.

Are there laws or contract clauses that are typically included in a sale contract that results in a consequence for a seller that does not actually sell the house to the buyer, fulfilling their contract?

[Minna Reid]

Your contract will spell out the ramifications of any breach so review it for your answer, however it doesn't seem very cost effective to pursue legal action over the cost of an appraisal and inspection. 

You may want to keep in mind that if this is one of the states with covid eviction moratoriums the tenant could easily just be playing the system to live for free as long as possible. The landlord may be helpless and doing all he can. I would not jump to the conclusion that he is somehow favoring the tenant.