Real estate in the Bay Area is notoriously pricey, and so any real estate sale is a serious matter — whether it’s the sale of a major commercial property or the purchase of a first home. Both buyers and sellers can have a lot riding on the outcome of a transaction, and they can get into a lot of trouble if the buyer or seller backs out.
Major San Jose land deal falls through
According to a recent news repot, a major Bay Area real estate deal collapsed when the buyer and seller could not agree to terms, even though the sale had been announced many months earlier.
The deal involves a 3,564-acre rural area in southeast San Jose. A former ranch, it has been zoned for agricultural use and is mostly undeveloped and pristine. The Chinese firm Z&L Properties paid a reported $25 million for the property in 2017, but reportedly never made any changes to it.
Last April, Z&L agreed to sell it to San Jose-based Terrascape Ventures for an undisclosed sum, but by December, the two parties quietly ended the deal.
Z&L, which owns other properties in the San Jose area, has faced a number of legal and financial problems in recent months, but news reports did not reveal if these were related to the failure of the rural land deal.
Protections
It’s common for residential real estate sales contracts to have contingency clauses which allow the buyer to back out of the deal at little or no cost to them. These clauses may spell out some of the possible contingencies that might cancel a deal, such as the home’s failure to pass inspection or the buyer’s inability to secure a suitable mortgage.
There is more variety in commercial real estate transactions, but it’s also wise for all parties involved to have some sort of contingency clause in their contracts so that they can be protected from the financial and legal consequences if it becomes impossible to go through with the deal.