Can Seller Cancel Purchase Agreement?
When you decide to cancel a deal when the home is already under contract, you can be sued for financial damages or obligated to close. Remember once the agreement has been written and signed it becomes legally binding
Reasons sellers walk away from closing
Some reasons include regret (sellers remorse,) you may not have been able to find a suitable replacement home, a change in lifestyle or a life event has happened, or a low appraisal where you are not able to cancel the deal.
When can a seller cancel a purchase agreement?
Some reasons include, if there is only a verbal agreement, if the contract has not been signed, if there is a new home contingency allowing you to back out if a new home cannot be found to meet your requirements in an attorney review where the attorney over a three to five day timeframe can review the signed contract, when the buyer agrees to cancel the sale, by sharing more negative aspects of the property and the work to be done on it – but you will also have to do this with other buyers in the future.
There are often multiple contingencies in an offer and one of these may prevent the deal – such as: When a home inspection throws up major concerns, financing falls through or the appraisal on the home is lower than the offer amount and no other financial arrangements can be made.
Penalties
Here are some of the penalties you may face when you decide to back out of a contract without a contingency:
Buyer sues for specific performance
Specific performance refers to the breach of contract by one party. Instead of a monetary reward, the court can order the party to perform the duties outlined in the contract — in this case, order you to complete the sale of the home and transfer the title to the buyer. While the buyer can take the seller to court and force them to move forward with the deal, buyers don’t often take this path, given the legal costs and how long it takes.
Buyer sues for damages
Another option the buyer can pursue is to sue for damages caused by the breach of contract, including:
- Temporary housing costs
- Storage costs
- Inspection fee
- Survey fee
- Lost deposits
- HOA application fees
- Legal fees
Listing agent sues for compensation
If you cancel your contract with your agent before closing, the listing agent may sue for lost marketing costs. Examples include money spent on photography, staging, advertising or open houses as well as commission.
Tips for backing out of a real estate contract
Pay the buyer
It’s usually easier to pay the buyer some amount of damages upfront rather than going to court.
Write a letter
If you are facing some kind of hardship that’s causing you to back out of the deal, the buyer may be sympathetic.
Source: https://www.zillow.com/sellers-guide/can-seller-back-out-of-purchase-agreement/
Craig Cherney is a trusted client advisor and a sought after real estate lawyer and expert witness who is hired by the nation’s top Real Estate Litigation Attorneys to help resolve their litigated real property matters. Craig has appeared as a testifying expert witness before judges and juries in California, Arizona, Nevada and other jurisdictions across the country. Craig Cherney, Esq. Expert Witness Real Estate. 480-399-2342. If you are litigating an easement case, Craig Cherney might be able to help you advance and win your case.