Question:
I am acting for a Buyer and saw the below clause in Schedule B.
“The Buyer hereby agrees that if the Buyer does not complete this transaction whether by way of his own decision or circumstances affecting the Buyer, the Buyer will forfeit the deposit as specified herein, in full to the listing brokerage and the parties agree that such deposit monies may be dispensed at the entire discretion of the Listing Brokerage and its Client”
I am wondering if accepting such clause could have a negative impact to my clients if they get into a situation where they can’t close.
Answer:
This is a totally unreasonable clause. Why forfeited to the Listing Brokerage, they are not parties to the deal? Who gets to decide this?
Why not simply go ahead with the normal rights that apply in the event of a failure to close?
How about not completing due to the Seller’s title defect? This clause doesn’t enable the Buyer to refuse to close for “good reason”.
The decision as to whether or not “the Buyer does not complete this transaction whether by way of his own decision or circumstances affecting the Buyer” is still a decision to be made by the Court.
Brian Madigan LL.B., Broker