Answer: a Lawsuit and Big $$$ (Potentially)
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
“PREVIOUSLY WRITTEN PURCHASE AGREEMENT: This Purchase Agreement Is/Is Not subject to cancellation of a previously written purchase agreement dated _______________ .”
–Standard Minnesota Purchase Agreement; lines 251. – 252.
Consider this not-so-hypothetical scenario: the Buyer and Seller have a fully signed (executed) Purchase Agreement, but the Buyer has yet to deliver the stipulated earnest money (at least in Minnesota, required within two business days).
Then Buyer #2 shows up with a (much) sweeter offer that the Seller wants to accept.
Yes, with a VERY big if: if the Seller makes acceptance of Deal #2 subject to the cancellation of Deal #1.
The perhaps not-so-obvious explanation is that there’s still a contract between the Seller and Buyer #1, albeit one that the Buyer has (temporarily) breached.
Unfortunately for the Seller, in this case, Buyer #1 can “cure” (fix) the breach . . . simply by delivering the earnest money.
That leaves Buyer #2 out in the cold, and the Seller stuck with Buyer #1 . . . **
**Subject to any contingencies (Inspection, Financing, etc.) in their Purchase Agreement.