Q & A – Binders

Question:
I recently put in an offer on a home and signed the binder. The seller also signed the binder. I thought I was all set, but then the deal fell through. The seller ended up selling to someone else. How could this happen? I thought the house was mine!

- Anonymous, Staten Island, NY

Answer:
Sorry, but the situation you find yourself in occurs far too often. The good news is that you may have a law suit on your hands. What really matters is the content and wording of the binder. Traditionally, a binder serves as a prelude to a negotiated contract of sale, but creates no obligation for either the buyer or seller. Many people sign a binder with this mentality, when it couldn’t be further from the truth. Unless the binder specifically states that ‘the parties do not intend to create a contract’ both sides may be liable to the terms of the signed binder.

However, the question is raised: Why would someone sign a binder if they didn’t intend to sign a negotiated contract? I’m sure there are numerous answers to that, but understand that when you sign a binder it could be the basis for a lawsuit. 

The best advice I could give you is to evaluate how much you desire to purchase the home. If this was your dream home or a great investment that you wouldn’t want to slip away, contact a real estate attorney and explain your case.

Best of luck and I hope everything works out!

- Thomas Ledger