Does a buyer have to disclose his contingency?
07/30/2015 | Author: Editorial Staff
My buyer client needs to close on the sale of his current home to afford purchasing a new home. Must he disclose this to the seller?
Yes. If your client’s ability to perform under a contract (i.e., close the transaction) is contingent upon the closing of another property, the contingency should be made part of the contract by using the Addendum for Sale of Other Property by Buyer. Otherwise, the buyer risks default under the contract if he fails to close because the sale of the other property doesn’t close. Default by the buyer could result in the loss of earnest money. The seller could also take action for specific performance or other remedies through the legal system, or both.
Remember, while your primary duties are to your client, you also owe a duty of fairness and honesty to the seller. If you know when an offer is made that your buyer cannot perform under the terms of a contract and you don’t disclose this to a seller, you may be breaching your duty to the seller, and there’s potential for a claim that you and your buyers have made material misrepresentations or misstatements to the seller or the seller’s agent.
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