I have been told that both the buyer and the seller must act in good faith in a purchase and sale agreement.  What does that mean?

The purchase and sale agreement spells out the contractual obligation between the buyer and the seller in purchasing real estate.   The good faith requirement fills in the gaps where something comes up that is not strictly covered by the purchase and sale agreement.  It is always a question of the facts involved in this specific area of dispute.  For instance, suppose there is an inspection clause in the purchase and sale agreement and, although the home inspection comes out "clean", the buyer, based upon some provision of it, decides to back out of the deal because of some minor aspect of the inspection such as the need for a new roof within ten to fifteen years which could be readily apparent to most buyers upon their own visual inspection of the property.  There is no hard or fast rule, but when it comes to a dispute, a judge will decide "who is the wise guy".   The bottom line is it becomes a question of what is "fair" under the circumstances and what the reasonable expectations are of both the seller and the buyer with respect to the actions taken by the seller and the buyer.  An experienced realtor can certainly be of assistance in helping to decide what is good faith and what is not given the normal experiences involving sellers and buyers.

If you have questions about this or any other real estate matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.