Tennessee Property Transaction Disputes
Buying or selling a property in Tennessee can be very complicated. And in very few circumstances, does a property transaction occur without a few hiccups. From the start negotiating the price to the closing of the property, there are so many steps that can cause a dispute in the process. If you hit a snag, contact our real estate attorneys: we have helped many clients, and we can protect your rights, money, and property.
Once a buyer and seller have signed a Purchase Agreement, the buyer is typically required pay a deposit, which indicates to the seller that he is a serious buyer. The money is usually held in trust by a third party, such as a Title Company or one of the Real Estate Agents. When the property transaction finally closes, the earnest money is used to pay the agreed upon purchase price. What happens to the earnest money when the transaction falls through?
The answer depends on whose fault it was that the property did not close. If the buyer backed away, then the seller gets to keep the money. If the seller cancels the contract then the buyer gets to have his money back. But there are many circumstances that make it unclear as to whose fault it is, or if the fault is excusable.
Many times the Purchase Agreement sets out a number of circumstances that state a reason why the seller or buyer may back out with no fault. For example, typically the contract states that the sale of the property is contingent on the buyer being able to obtain financing. If he cannot obtain financing, then the sale is cancelled and the buyer gets his money back. But what if he is denied because he bought a new car between signing the contract and the closing? Purchase Agreements usually state that the buyer is not allowed to take any action that will dramatically change his finances.
Purchase Agreements get cancelled often and for many reasons, some of which the contract does not anticipate. If you are buying or selling a property remember to always read the provisions of the contract before you sign, as significant money is at stake.
Purchase Agreements and Quit Claim Deeds
In order to save paying commissions, buyers and sellers will often choose to transfer the property without the use of real estate agents or attorneys. It is these situations that we see the most litigation, because the transfer was not done properly. Whenever buying or selling property, we highly recommend you have an agent or an attorney work with you to make sure the transfer is done right.
There are many ways that a Quit Claim Deed, or any deed for that matter, can be invalidated in Tennessee. Mistakes in property description, notary errors, fraud, and other ambiguities such as the new owners can be used to invalidate a deed. For example, if a deed transfers ownership to new owners as “husband and wife,” what happens if the two were not actually married? For errors, omissions, and ambiguities the typical test is what was the intent of the parties, or the prior owner’s intent if the deed was a gift.
In general, contracts create agreements between individuals regarding each’s rights and duties. Particularly in real estate transactions and litigation, contracts are critical in knowing and protecting a buyer’s and seller’s interests.
Purchase agreements, like other contracts, have “conditions,” which must occur to complete a transaction. Well-drafted purchase agreements are essential to successful real property transactions. It is very important to make sure that a real estate contract, accurately details the terms and conditions of the agreement. While Tennessee courts may enforce a contract that lacks a purchase price, or a definition for the subject property, both buyers and sellers involved in the real estate transaction need to protect their rights by drafting a comprehensive contract.
Additionally, Tennessee courts will sometimes look at business customs and practices to interpret vague terms in contracts. Generally, the intent of the buyer and seller are based on the language of the contract. Accordingly, it is especially important to make sure that the contract clearly spells out your particular intent under the contract. To ensure that such a significant purchase does not depend on the interpretation of a judge, it is important to the parties’ financial and legal interests to prepare a comprehensive contract in order to successfully enforce and interpret the real estate contract.
If you are involved in a real estate dispute, or embarking on buying and selling a property, please contact our real estate attorneys to help you.