Legal Question in Real Estate Law in Virginia
An owner enters into a sales contract for unimproved property.
It is known by all parties that the said sales contract, if not agreed to by the bank
holding the note, that the bank will go to foreclosue sale with the property.
the bank finds the contract unacceptacble and the property goes to foreclosure sale.
The purchaser placed an ernest money deposit with their real estate brokerage.
What is the status of the contract once the property goes to foreclosure?
This is in a deed of trust state. Does the contract automatically terminate when the the property is foreclosed on?
1 Answer from Attorneys
If the written contract specifies that the bank must find it acceptable
as a condition precedent to the parties' moving forward with the agreement, then an adverse finding by the bank would essentially render the contract a legal nullity.
However, merely because the above is allegedly "known by all parties"
means little unless it is spelled out in writing as part of the
written purchase agreement (contract) which should also contain
a provision for the return of the earnest money to the would-be purchaser
(in my opinion).
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