Expert: Ray Beggs - 8/14/2006

Question
Thanks for your prompt and very helpful reply to my earlier question.  However, I would like your comments regarding this matter, given a little more details.  Fact:  I agreed to sell a large parcel of land (36 ac. of a larger piece which total 86+ acres)to the buyer last October for the price of $500k; with the proviso that I seperate the 36+acres out from the 86 with a recorded subdivision, and that the back taxes on the property is paid up in full.  I tried diligently to meet those two condition, but was not able to until long after the sale closing date had passed.  The buyer granted three extension to the closing date, which ended on January 4, 2006.  The buyers did put up a deposit; but beyond that, they want to force me to sell the property and I have informed them that I no longer want to sell.  They filed a lis pendens to make me sell.  The purchase and sales agreement was drafted with several ambiguieties, including no specific definition of the actual property being purchased.  Even now, I have not been able to subdivide the property so that the 36+ac portion can  be sold off.
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Followup To

Question -
What is the reasonable time for a purchase and sales agreement to be terminated, cancelled following the agreed upon closing date.  Certain situations (determinants and conditions for the sale)could not be met before (or even a long time after) the closing date.  In such a case, is the contract/agreement terminated?

Answer -
Hi Bob,

Thanks for the question. In the case of a contract going past it's written close date, after the date is past, either party can cancel the contract at anytime OR the parties can agree to extend the time frame. I always do any of these extensions as an amendment in escrow to make sure that everyone is on the same page. Also, remember that your individual contract should tell the parties involved what they need to do to either cancel or extend. In our contracts, there is a clause that reads that any party who wishes to cancel this contract shall give the other party written notice within 24 hours.

In response to your reasonable time question, every situation is different and it depends on what is holding up the deal. Is it because the lender needs a couple of days to get the loan docs signed or is it because the other party is stalling for time and you are concerned that it will never get closed. In the first case, I would extend for a period of time. In the case of the buyer/seller stalling us, I would cancel that right away.

Hope this helps and good luck,

Ray

Answer
Hi Bob,

First off, I'll have to refer you to an attorney becasue this is outside of my scope and more of a legal issue.

I can however, give you my opinion given the details you provided me. I would say that this contract is dead and you need to send to the buyers (if you haven't already) your intention/belief that the contract is canceled. Now, as far as the buyers forcing you to sell at this point, I can't see that happening. It's more likely to me that they may be able to sue for some sort of monetary damages (if they can prove they had any) because you didn't fulfil your end of the deal.

Again, this is a legal issue and your best bet is to contact an attorney and bring them up to speed on the deal.

Take care,

Ray