DEFAULT UNDER AN REC
Generally, if a buyer defaults under an REC, the seller will send the buyer a Default Notice which specifies the default and explains how the buyer can cure the default and the time frame for doing so. Most commonly, the buyer is given 30 days to cure the default, but this time-frame is a negotiable term of the REC.
If the buyer does not cure the default in the time frame provided for in the Default Notice, the seller has the option of either “taking back” the property and keeping all monies paid by the buyer, including all monies the buyer may have invested in improvements to the property OR declaring the balance due on the REC and proceeding to enforce the payment thereof, plus interest, costs and attorney fees by filing a complaint in district court.
If the seller opts to “take back” the property, there are certain procedures that must be followed in order for the seller to eliminate any/all liens the buyer may have acquired against the buyer's interest in the property. If the seller opts to terminate the buyer’s rights in the property, the buyer must vacate the property unless otherwise agreed to by the parties. If he/she refuses to do so, the seller may file a court action to have the buyer removed from the property.
Courts typically enforce the terms of an REC and allow a seller to "take back" the property without any compensation due to the buyer; however, there are occasions when a buyer has made a substantial investment in the property that a court may require the seller to compensate the buyer for some/all of the buyer’s investment or may require a restructuring of the REC.
To obtain this type of relief, the facts must be such that the court determines that it would "offend the conscience of the court" to allow the seller to "take back" the property without compensating the buyer or providing the buyer alternative options. If this threshold is met, the court will then determine the appropriate remedy.