Buyers spend a lot of time scouring for homes that will fit their family and future perfectly. You look at the sales history, property taxes, interior and exterior, crime rates, and schools. But even when you put in an offer on a home, the seller may back out of the deal.
Buyers Have a Lot of Power in the Process
Real estate contracts are legally binding, and it’s very difficult for the seller to back out of a deal. There are a lot of loopholes that may allow the contract to be terminated, but buyers often have protection in the form of compensation.
In some cases, the seller must pay the buyer for breaking the contract, which can be very expensive, especially when a high-end home is involved.
If some agreement isn’t made, the seller may have to spend money on:
- Legal fees
- Court cases
There’s also the risk that the court will force the seller to move. Sellers may put their home on the market and then have to leave the deal for a variety of reasons, including but not limited to:
- A higher offer was made, and the seller is trying to break the contract to make more money.
- Circumstances change for the seller; perhaps they lost their job or won’t be able to relocate as expected.
- Sellers not finding a home to move into before the sale of their home is finalized.
- Some sellers get cold feet because they have memories and an attachment to the home and no longer want to sell.
How Sellers Can Legally Break a Real Estate Contract
Sellers will have issues finding a legal means of backing out of a contract unless a home sale contingency is in place. You’ll find a lot of sellers selling their home on a contingency basis which means that:
- The seller will not sell the house if X doesn’t happen
- X usually involves the seller of another home not backing out of the deal with the seller of a particular home
Contingencies are written into contracts and will be presented at the time the contract is signed.
A seller can back out of a deal is if the buyer doesn’t uphold their end of the sale. For example, it may be written into the sales contract that the buyer must obtain a mortgage within 60 days of the contract, or an inspection may have to take place in a specific timeframe.
Sellers can terminate the real estate contract if the buyer isn’t meeting their contractual obligations.
What Happens If the Sellers Cancel a Real Estate Contract?
It depends. Sometimes, life circumstances are involved, and the buyer understands the situation without any repercussions being pursued. But the buyer does have a right to push the issue and try forcing the contract, which can lead to:
- The buyer forcing the sale through the court or legal avenues
- The buyer can place a lien on the property
- The buyer can sue the seller for monetary damages and to sell the home
Even the listing agent can pursue damages against the seller of the home to cover any costs they incurred. Mediation may be required to find an amicable settlement.
If you’re a seller trying to get out of a real estate contract, discuss the issue with your listing agent and the buyer’s agent to try and work out a solution – it’s cheaper and faster than going to court.