Recourse if seller backs out of a purchase agreement?

[Jdege]

Suppose you make an offer, sign a purchase agreement conditional on sea-trial, survey, and hand over a deposit to the owner.

Then the seller sells to someone else. Perhaps it's a busy time, surveyors are booked out a couple of weeks in advance, and he just gets tired of waiting for the survey.

What is the buyer's recourse? What would be considered usual, or reasonable?

I'd expect return of deposit, of course.

Would it be reasonable to expect reimbursement of any expenses? If the buyer has paid out for survey, sea-trial, etc., should he expect to be reimbursed for those expenses, if it's the seller who has backed out of the agreement?

Ditto for travel and lodging, if the buyer had to travel to the location of the boat?

What is usual? What would be considered reasonable?

[carstenb]

Originally Posted by Jdege

Suppose you make an offer, sign a purchase agreement conditional on sea-trial, survey, and hand over a deposit to the owner.

Then the seller sells to someone else. Perhaps it's a busy time, surveyors are booked out a couple of weeks in advance, and he just gets tired of waiting for the survey.

What is the buyer's recourse? What would be considered usual, or reasonable?

I'd expect return of deposit, of course.

Would it be reasonable to expect reimbursement of any expenses? If the buyer has paid out for survey, sea-trial, etc., should he expect to be reimbursed for those expenses, if it's the seller who has backed out of the agreement?

Ditto for travel and lodging, if the buyer had to travel to the location of the boat?

What is usual? What would be considered reasonable?

unless the agreement specifically states that the seller retains the right to sell even though a deposit has been paid - normally, a signature and a paid deposit holds the item in question until the sale is finalized. Of course, if the survey is taking an inordinate amount of time - then the seller would be in his rights to return the deposit and cancel the sale and sell to another. Of course, the seller should contact the buyer and say, "if you don't finalize within XXX days then I will cancel the sale etc.

Not sure about any out-of-pocket expenses you've had - I'd expect they are your loss.

[Montanan]

The terms of the purchase offer should specify the duration of time for the resolution of the buyer's contingencies and final decision, and for a no-later- than-date for closing the deal, as well as the terms of settlement of escrowed funds, if any, and the allocation of expenses to be incurred by the parties.

These are issues that typically arise and should be addressed at time of contingent offer and acceptance of offer. For boats, cars, houses, etc.

[Cheechako]

Originally Posted by Jdege

Suppose you make an offer, sign a purchase agreement conditional on sea-trial, survey, and hand over a deposit to the owner.

Then the seller sells to someone else. Perhaps it's a busy time, surveyors are booked out a couple of weeks in advance, and he just gets tired of waiting for the survey.

What is the buyer's recourse? What would be considered usual, or reasonable?

I'd expect return of deposit, of course.

Would it be reasonable to expect reimbursement of any expenses? If the buyer has paid out for survey, sea-trial, etc., should he expect to be reimbursed for those expenses, if it's the seller who has backed out of the agreement?

Ditto for travel and lodging, if the buyer had to travel to the location of the boat?

What is usual? What would be considered reasonable?

The seller is obligated to sell if the contract is signed AND if a date is specified. Make sure it has a date by which you have to survey, sea trial, inspect and accept/reject the boat etc.
As a seller, I got in a situation once where, after a few offer/counteroffers, the Broker forgot to specify an end date on the last counteroffer. I rejected the offer and sold to someone else at full price. Because no date was specified by which the buyer had to accept, the lawyers got involved.

[Montanan]

The terms of offer and counteroffer should be explicit, [stated clearly and in detail, leaving no room for confusion or doubt], there is no basis for parties to have their own "expectations" and uncertainties.

Take time up front, utilize professional terms of contracts. Discuss all points and issues. There is joy to be had in friendly and professional negotiations as the goal is to come to commonality and agreement.

Most persons are not experienced or knowledgeable about purchase and sales agreements and terms. Ignorance leads to difficulties and mis-understandings / mis-interpretations.

There is a beginning and an end to a bargaining and transaction, both should be defined.

[barnakiel]

In Europe, if you pre-paid a small amt, to lock the trade, and if then the seller backs off without any good reason, then the seller is in fact bound to return a multiple of the amount pre-paid.


Funky, but seems to work very well.



b.

[Pelican_38]

Rule 1: Never take legal advice from the internet.
Rule 2: Never listen to me.

Having clarified those two rules: If you are still within all of the specified terms of the purchase agreement, then you can legally force specific performance through the court. If the boat has been sold to someone else and you were not in violation of the PA, you can sue for damages. In that case, you have nothing to loose by adding in travel, hotel costs, etc.

You are probably not going to go to all that trouble, so asking for full reimbursement of all direct expense (survey, etc) and being willing to let go of the indirect expense (travel, hotels) you might get some satisfaction.

In short, had you violated the agreement he could have kept your deposit. But since he violated the agreement then you should demand reimbursement.

If there was an escape clause included (a survey by date, etc), then he will simply say he exercised it and there was no violation.

[canyonbat]

In most circumstances in the U.S., the best you can hope for would be recovering your out of pocket expenses and, possibly, attorney’s fees. ‘Specific performance”, such as forcing the seller to sell to you or forcing a painter to paint your house, is not something that courts often, if ever, award.

[Stewie12]

It depends what the contract says. A contract has to be fair to both parties.

[canyonbat]

I could possibly see a court awarding you the difference in selling price if the seller sells the boat for more than your contract price.

[Augi]

Originally Posted by barnakiel

In Europe, if you pre-paid a small amt, to lock the trade, and if then the seller backs off without any good reason, then the seller is in fact bound to return a multiple of the amount pre-paid.


Funky, but seems to work very well.



b.

Depends if something like the above is legally binding in the specific jurisdiction on how effective it will be, but it sounds like a good idea for buyers to include the above type wording with specific time limit to complete survey, etc.

I also put in all agreements(not just regarding boats), the loser pays all reasonable legal fees of both parties if there is a legal dispute. You could include cost of buyer's travel and survey, etc. is the seller violates the contract. Even with the above it may not be worth it to go to court in a lot of jurisdictions or go to court, period, because doing so is so distasteful. I prefer to always deal with the other party as opposed to a lawyer or broker of some type so I can get an idea of the type of person I am dealing with. Any red flags and I don't proceed with the business. Life is too short. Especially for a used boat since there are almost always something else comparable available.

[barnakiel]

Also depends on what size the deal is.


Small deals, maybe up to 30 or 50k, are paid cash in hand (I mean, a bank wire) so the contract is just a standard one that you can find online (or as anybody who bought a boat recently to copy their wording).


Bigger deals will have more nuances, maybe a broker or two, maybe a banker, etc.


So you want to b realistic in how much paperwork you want, depending on how much she costs.


b.

[Thumbs Up]

If you post the wording of the contract you will get better advice.

[Augi]

Originally Posted by Jdege

Suppose you make an offer, sign a purchase agreement conditional on sea-trial, survey, and hand over a deposit to the owner.

Then the seller sells to someone else. Perhaps it's a busy time, surveyors are booked out a couple of weeks in advance, and he just gets tired of waiting for the survey.

What is the buyer's recourse? What would be considered usual, or reasonable?

I'd expect return of deposit, of course.

Would it be reasonable to expect reimbursement of any expenses? If the buyer has paid out for survey, sea-trial, etc., should he expect to be reimbursed for those expenses, if it's the seller who has backed out of the agreement?

Ditto for travel and lodging, if the buyer had to travel to the location of the boat?

What is usual? What would be considered reasonable?

Another idea is pay asking price or close to asking price or what is full retail for the boat and require the seller to pay any defects the surveyor finds over a small deductible. If the seller refuses to pay the defects the surveyor finds over the deductible then the seller pays the survey, haul out, buyers travel expenses, etc. Included in the above is have the seller put into escrow the amount for survey, travel etc. upfront. Just make sure you have an excellent surveyor. Requiring the above might kill the deal since the above is a non traditional approach. That might be a good thing since if requiring above kills the deal maybe the boat has a lots of defects that the seller is hoping to slip by and he is choosing to wait for an easier mark. But of course it all depends on the specific circumstances what approach is taken in any deal not just boats.

I also agree with other posters that other than on very small business deals with minimal downside NEVER be your own lawyer or take legal advice from the internet. For legal advice or business advice the advice provided on this forum is worth what you pay it. That includes the advice I give.

[roverhi]

Yes you can sue but as in most small cases the only winners will be the attorneys. If the seller has sold the boat to another party, you have no hope of voiding the sale and purchasing the boat. You can sue the seller for damages that you actually incurred like survey, inspections, etc. but it will cost a fortune in legal fees even if you win unless the court awards payment for the expense. You will have to get a judgement against the seller for the damages but good luck on collecting. You can file a lean against any assets but you'll have to find the assets and serve papers which will all come out of your pocket. In short, unless you like to be the payee on welfare for attorneys, forget it.