Frequently Asked Questions

Legal Hotline FAQ

A blog of the most frequently asked questions to the Maryland REALTORS Legal Hotline.

Cindy Sellers
Cindy Sellers
Cindy Sellers's Blog

When a contract will not settle, how do I get the property back on the market?

When there is a valid contract of sale, a written release of the existing contract that also provides disposition of any deposit monies is prudent and well-advised.If the contract is not going to be consummated due, for example, to failure of a contingency or simply mutual agreement of the parties, a written release of contract and disposition of deposit agreement provides both the seller and buyer with a finality to their prior transaction. It is acknowledgement that the contract is now null and void. The seller is free to enter into a new contract for the property, and the buyer may sign a purchase contract for another property.
However, there is no law providing that a seller cannot lawfully enter into a new contract of sale for the sale of the property, even though the prior existing written contract has not been formally released in writing by the parties, and even though there is no written agreement regarding the disposition of deposit monies.
As often occurs, a seller may believe that the buyer has breached a term and condition of the written contract, or has failed to timely comply with any notice requirements required under the contract of sale. In such cases, the seller is reluctant and unwilling to release the buyer from the written contract of sale. Instead, the seller will simply declare the buyer to be in breach of the contract of sale and will proceed to resell the property to another purchaser. By not releasing the purchaser from the original contract of sale, the seller is then free to pursue any legal action against the buyer for damages allegedly incurred as a result of the purchaser's breach of the contract of sale. In some instances, such damages may include a forfeiture of deposit money.
In reality, a law providing that a seller could not enter into a new contract without first obtaining a written release of any previous contract would constitute a very harsh rule indeed. If it were the law, then any time a buyer refused to sign such a release, whether for capricious and arbitrary reasons or simply because the buyer couldn't be found to execute the release, then the seller would be unable to sell and convey the property to any third person in perpetuity. In recognition of such harsh reality, the law permits the seller to sell the property to another buyer notwithstanding that there has been no formal written release of any prior contract or disposition of any deposit monies paid.
Of course, a seller who signs a subsequent written contract of sale without a written release of any prior contract does so at his or her own risk. The original buyer may disagree with the seller's assertion that there is no contract, or that the buyer has breached the contract, and might even sue for specific performance of the contract. In such a situation, if the buyer were to prevail in court, the seller would automatically be in breach of any subsequent contract of sale with another purchaser. It is this possible outcome that demonstrates the advantage of a written release from the original contract. In the absence of such a release, however, the law does permit the seller, who presumably would consult with legal counsel, to sell the property to a subsequent buyer and convey title to the property, subject to any legal rights the first buyer may have against the seller for specific performance or monetary damages.

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