A Buyer presented a written Offer to Purchase to you which you subsequently “countered”, the only change being the purchase price. Your Counter Offer was in writing and the Buyer, through their Agent, communicated back that the Buyer had “verbally accepted”. A day goes by, then two and you still have not gotten the fully executed, written Agreement back from the Buyer/ Buyer’s Agent. You may have even felt so good about the “deal” that you “pended” your house in the Multiple Listing Service (MLS) because you didn’t want to be further inconvenienced with showing requests from other Buyer prospects because you were confident that you would be closing in 30-45 days with the Buyer, with whom you came to terms with a few days earlier.
After several days of not hearing back from the “other side” you are now starting to get very concerned because you never received the written, fully agreed, contract back from the Buyer. Finally, a week later, you get the dreaded phone call that your gut was trying to warn you about; the Buyers got cold feet and were backing out of the deal!
At that point, you may have felt anger and outrage. You felt like you lost a week of marketing time and possibly lost the Buyers as a result and may have even incurred additional expenses by placing a deposit on a storage unit so that you could move out, close and give possession to the “Buyer” in compliance with the terms of the “Agreement.”
Lastly, you felt it was just “not right” for the Buyer to back out and at the very least, you felt justified in keeping the Buyer’s earnest money; it was the principle of the the thing after all!
Unfortunately for you as a Seller, only written real estate contracts are enforceable in Tennessee. In the instant case, the parties did reach a “Meeting of the minds” and you’d like to think that people would’ve been ethically bound by “Their word”. However, legally the Buyer is in a very strong position to agree (and win) that they should not be held to the terms of the “verbal agreement” and furthermore, that they were entitled to the full return of their earnest money because there was never a Binding Agreement.
The converse is also true, some times a Seller agrees verbally to the terms offered by a Buyer, but reneges when another Buyer subsequently offered more attractive terms and the original, signed Agreement was never delivered to Buyer #1, so there was never a written, Binding Agreement that the Buyer could enforce.
Realtors in Tennessee cannot give legal advise. If you’ve had an issue along these lines please contact an Attorney even though you’re now a little smarter after reading this article!
Let me know if I can help you buy and/or sell real estate, particularly in Middle Tennessee.