The Wall Street Jouranl reports that home buyers who signed contracts when the market was hot are now trying to get out of them.? The buyers are claiming that they were scammed into homes they couldn’t afford or that they were victims of fraudulent investment schemes. Others are looking for loopholes to get out of the contracts, or trying to find small defects in the homes that may help them escape.
Cancellation rates on these home buying contracts may be as high as 30%. The story highlights a few situations in Florida, where attorneys are even advertising their services to people who want to get out of their contracts.
In one situation a woman and her husband got three construction loans to buy three houses totaling $750,000. The couple’s wages are about $90,000, so they should not have qualified for these loans. They now claim that the real estate broker promised to find tenants for the houses, but that never happened and two of the loans are in foreclosure. A suit is being filed against the builder, the lender, and the real estate agent, alleging the couple was defrauded in this “investment scheme.”
Some builders are not backing down. A developer in Florida has multiple buyers trying to cancel contracts for condominimums. The developer is citing a “specific performance” clause in their contracts, which requires the buyers to close on the sales. Some buyers are willing to walk away from their 10% or 20% deposits on the properties, but this developer says that’s not enough and they need to make good on the contracts. Some who have been sued by this developer eventually closed on the sales rather than litigate.