What Happens if a Listing Expires While Under Contract?
Navigating a home sale when the listing expires mid-contract. Understand the process and ensure a smooth closing.
Navigating a home sale when the listing expires mid-contract. Understand the process and ensure a smooth closing.
When a property listing expires while a purchase contract is already in place, it is important to understand that the listing agreement, which is a contract between the seller and their real estate agent, operates independently from the purchase contract, which is a legally binding agreement between the buyer and the seller. The expiration of a listing primarily affects the property’s visibility on the market, not the ongoing transaction.
An executed purchase contract remains a valid and legally enforceable agreement between the buyer and the seller, regardless of whether the property’s listing has expired. The listing agreement governs the relationship and responsibilities between the seller and their real estate agent, including marketing efforts and commission. Once an offer is accepted and a purchase agreement is signed, the terms outlined in that contract dictate the transaction’s progression.
The enforceability of the purchase contract is tied to its specific clauses and the fulfillment of any contingencies. These contingencies, such as financing approval, a satisfactory home inspection, or a property appraisal, must be met for the contract to proceed. The purchase contract remains binding as long as these conditions are either satisfied or waived by the parties involved.
For instance, a financing contingency typically grants the buyer a period, often 30 to 60 days, to secure a mortgage loan. If the property does not appraise for the agreed-upon price, an appraisal contingency allows the buyer to renegotiate or, in some cases, withdraw without penalty. Similarly, a home inspection contingency provides an opportunity for the buyer to assess the property’s condition and request repairs or adjustments to the purchase price based on findings.
With a valid purchase contract in place, the focus shifts to fulfilling its terms and moving toward closing. This involves coordinated steps by both the buyer and the seller, often with the assistance of legal counsel or a title company. The buyer must work to satisfy all contractual contingencies, such as securing final loan approval, completing any required inspections, and obtaining an appraisal.
The title company plays a central role in facilitating the closing process. They conduct a thorough title search to ensure the property has a clear history of ownership and no outstanding liens or disputes. The title company also manages the escrow account, holding all funds and documents securely until all conditions of the sale are met and the deed can be legally transferred. Communication between the buyer, seller, lenders, and the title company is essential to address any last-minute issues and ensure a seamless transfer of ownership.
Even if a listing expires, the real estate agent who procured the buyer may still be entitled to a commission. This is governed by clauses within the original listing agreement, such as a “protection period” or “procuring cause” provision. A protection period, also known as a tail period, is a negotiated timeframe, often ranging from 30 to 180 days after the listing expires, during which the agent can still earn a commission if the property sells to a buyer they introduced.
The concept of “procuring cause” means the agent initiated a series of events that directly led to the sale. This clause protects the agent’s efforts and investment in marketing the property. The agent may continue to assist in coordinating aspects of the closing, even without an active listing, to ensure the successful completion of the transaction.