Termination and Relisting A Property After A Buyer’s Breach

​Sellers are always anxious to get their property back on the market after it looks like the buyer won’t be closing.  So long as the purchase agreement is properly terminated, the property can be relisted.  Watch for these issues to be certain that termination is proper.  If so, and the Seller terminates by a Unilateral Termination, the Seller can immediately relist. An improper termination could open the Seller to liability. 
 
It is important to understand the differences between a breach of contract, an anticipatory breach of contract and a non-breach of the contract. Here are some common situations.

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1. The Buyer did not show up for closing.  Can the Seller terminate and relist?

So long as the Buyer does not have the right to either cure a breach or extend the closing date, the Seller can terminate and relist.  Be careful here. The GAR contract allows for an 8-day extension under certain circumstances.  Be sure not to terminate until the right to an 8-day extension has expired – usually the end of the day set for closing.  To be certain, the Seller should unilaterally terminate the contract the day after the date set for closing.  As soon as the Unilateral Termination has been delivered to the Buyer, the Seller can relist the property.  A Seller’s right to earnest money in this case is not extinguished by a seller’s unilateral termination. The determination of distribution of earnest money can still be handled after the termination.
 

1. The Buyers say they are probably not going to close on the date set for closing.  What if the buyers say that are not going to close? 

Anticipatory Breach occurs if a party refuses to perform contractual obligations prior to the time performance is required. It is treated just like a breach, it just occurs before the time for performance. To qualify as a claim of anticipatory breach, the breach must be an unqualified repudiation of the entire agreement before the time of performance. In other words, the party must unequivocally refuse to perform before the performance is required. Anything less is not an anticipatory breach and the seller cannot terminate and relist.
 
So, if the buyer says he is probably not going to close, the Buyer has not breached the agreement and the Seller cannot terminate.  But if the Buyer says he is not going to close, he has breached the agreement and the Seller can terminate.
 

1. What if a buyer is denied a loan?

The Buyer tells the Seller he has been denied financing by one lender, but will pursue other financing.  This would not be an anticipatory breach because there is nothing unequivocal to indicate that the buyer does not intend to perform. However, if the buyer cannot get financing and tells the seller that he cannot perform, this is an anticipatory breach.  Usually, in this case, the buyer will agree to a mutual termination.