Given the current economic climate, it’s not surprising that more contract purchasers are attempting to get out of their contracts — especially those entered into at the top of the market. An increasing number of real estate purchasers are devising ways to challenge the enforceability of real estate purchase contracts.
In one such attempt, the Circuit Court of Fairfax County held that the foreclosure sale purchaser was entitled to cancel his condominium contract because the contract lacked mutuality of obligation for the seller trustee. Busman v. Beeren & Barry Investments, LLC, 69 Va. Cir. 375 (Va. Cir. 2005). The contract provided that “[b]uyer’s sole remedy at law or at equity in the event of [t]rustee’s default shall be a refund of the deposit hereby received.” Id. at 379. In analyzing the contract, the court determined that the contract was unenforceable, because the seller could default without recourse and the remedies clause only bound the purchaser to perform.
Developers and sellers may have already experienced an increasing number of purchasers looking for ways to invalidate their purchase contracts. As a result, developers and sellers should pay close attention to contract language, to ensure that both parties are bound to perform and that the contract is mutually enforceable.
Please contact us if you have concerns or questions. For more information, visit our Greater Washington-Baltimore Region Transactional Real Estate practice.