When you agree to sell real property in Maryland, there is a period between the agreement and the formal closing of the deal where a number of changes could occur. This may include the buyer getting cold feet and trying to back out of the deal.

If there is no contingency that allows them to terminate the deal without technically breaching, you can pursue legal avenues against the buyer to recover compensation for the financial consequences of the breach. It is unlikely, however, that you can force the buyer to actually purchase the property, except in special circumstances.

To learn more about your options for dealing with a real estate transaction dispute, call the Heyman Law Firm at (410) 305-9287. Our experienced Maryland real estate attorneys can offer you a free initial case evaluation.

What is Specific Performance in Maryland?

In the case of any breach of contract, there are a number of remedies available through law to restore equity for the non-breaching party as a result of what they have lost. Identifying which of these remedies suits the situation best depends on the circumstances of the contract and the breach. There is one remedy in particular that exists for situations where the non-breaching party is denied something of innate value that cannot be replaced by monetary remedy.

This remedy is known as specific performance. Specific performance is a remedy to breach of contract where a court can order the breaching party to honor the terms of the contract. Specific performance is typically only available if the breaching party is capable of living up to their end of the bargain and is used where the breaching party’s promised consideration has such sentimental or intrinsic value that simply compensating them with money will not make them whole.

Can a Residential Seller Use Specific Performance to Force a Buyer to Close in Maryland?

Specific performance is a remedy that is most commonly seen in breached real estate sale agreements. This is because the difference between owning a specific property and not owning it often meets the criteria for determining that the intrinsic value of the property warrants this remedy.

However, specific performance is rarely, if ever, used for the benefit of a non-breaching seller. If a buyer backs out of a real estate purchase agreement, the non-breaching seller still has possession of the property and does not have the money that the buyer promised. The money that the seller lost out on is fungible (i.e., someone else’s money would be the same as the original proposed buyer’s money), so it is unlikely that a court reviewing the case would determine that the buyer must purchase the property in order for equity to be restored amongst the parties.

One rare example of when specific performance can be used to enforce a purchase of real property is where the agreement involves multiple properties changing hands across sides. For instance, if Party A agrees to transfer their property to Party B in exchange for real property that B owns, among other cash considerations, but Party B backs out before closing, a court can enforce specific performance because of the unique nature of the property that Party A would have obtained in the deal.

In the context of real estate deals, specific performance is almost always used when a seller backs out of a real estate sale, as the buyer is denied the intrinsic value that comes with the unique property. This does not mean that a non-breaching seller is left without opportunities for remedy, however.

Residential Seller’s Rights After a Buyer’s Breach of Contract in Maryland

If you accepted an offer for the sale of your property, only for the buyer to get cold feet before closing and breach the agreement, there are a number of options at your disposal to recover for the harms that the breach may have caused.

If the buyer put down a good-faith deposit when their purchase offer was accepted, you will likely be able to keep that deposit. The anticipation of any issues that might occur between acceptance and closing is the reason why most real estate sellers require a deposit up front.

You can take the other party to court to seek monetary compensation for the harms that the breach caused. To do this, however, you must first establish that the buyer actually breached the agreement.

Many real estate deals often feature language that allows for buyers (and sellers) to back out of the deal prior to closing for valid reasons. These are known as contingencies. The two most common contingencies in real estate deals are inspection contingencies and financing contingencies.

Inspection contingencies often provide the buyer the opportunity to have the property inspected for serious issues for a period of time before closing. If the buyer’s inspection turns up serious problems that would require repairs, and the two sides cannot negotiate a resolution over these issues, the buyer can terminate the contract without being in breach.

Financing contingencies account for situations where the buyer cannot obtain suitable financial backing to support their purchase. The majority of residential real estate buyers need to secure some sort of financing to facilitate the deal. If the agreement contains a financing contingency, the buyer can back out of the deal if they discover that they cannot obtain a loan or mortgage so that they are not on the hook for payments that they cannot make.

If the buyer backed out prior to closing without relying on a valid contingency, you can sue for monetary remedies. Calculating the financial harm that the breach caused may prove difficult without the assistance of an experienced Maryland real estate attorney.

Talk to the Heyman Law Firm About Your Legal Rights Under Maryland Real Estate Law

To get immediate legal assistance with your real estate contract dispute, reach out to the seasoned Maryland real estate lawyers at the Heyman Law Firm. Call (410) 305-9287 to get your first case evaluation for free.