In a recent case a husband and wife owned a business, but it was not doing well. They decided to downsize their home and exchanged contracts to sell it for $1.35 million dollars. They then entered into a contract to purchase a new home.
Their contract for sale of their home included a clause that stated that if the purchaser did not complete then the husband and wife could resell the property and sue the purchaser for their losses.
Their purchaser did not complete the contract on time. The husband and wife gave the purchaser an extra week to get finance. After giving multiple notices which were ignored the husband and wife terminated the contract. The husband and wife then put the property back on the market, and on the advice of their selling agent a new marketing campaign was set to last for eight weeks.
Three days into the new marketing campaign, the husband and wife received multiple offers.
They shortly accepted an offer for $1.165 million, and the property was kept on the market for another 10 days until the contracts for sale to the new purchaser were exchanged.
The husband and wife then sued the initial purchaser for the difference in the sale price, being $185,000. The initial purchaser argued that the husband and wife had not taken reasonable steps to achieve the best possible sale price, and instead just wanted a quick sale.
The Court found that the husband and wife had properly followed their agent's advice, were facing a decline in their business, they had actually negotiated the sale price, and they had kept the property on the market until the contracts were exchanged. They were therefore entitled to the full difference between the original sale price and the new sale price.
This case highlights one of the principles of the compensation that can be payable by a purchaser if they enter into a contract for sale of land but cannot complete.