It’s usually a heavy lingering thought to have every time you go through selling something, whether it’s a vehicle, memorabilia, or your own home. You finally found a buyer for your house, and the contract is signed, and the closing date is set. But then the unthinkable happens, and the buyer gets scared for whatever reason, the home is priced too high, they found a better deal, they want a lower price, and they back out of the agreement. Now, as the seller, you are left thinking, do I have any sense of recourse here? And the answer is, “it depends.”
Repercussions For Both The Buyer and Seller
A real estate deal is full of clauses and language that make the document very complex, legally binding the buyer and seller to this transaction. Therefore, there can be significant ramifications if the buyer decides to get cold feet and back out. For the seller, it means only a few things, lost time, lost money spent (depending on how far along in the process you were with the cold footbed buyer), lost money spent on marketing, and lost potential leads on other buyers not to mention emotional distress, as the seller may have been all-in on this sale to go through and had made permanent decisions like putting an offer on another house because they thought thus deal was solidified. This brings us to our next point, and that is a contingency clause that is usually found in every generic purchasing agreement that allows the buyer to cancel the deal if certain conditions have been met, for instance, not being able to obtain financing or if the home doesn’t pass a home inspection. However, if the buyer backs out due to anything but an invalid reason, they may be required to forfeit the earnest money deposit (1-2% of purchasing house price). That said, sometimes that is a substantial amount of money if we are talking about a multi-million dollar home. Therefore, it is imperative for buyers to carefully consider all risks and actions before canceling a real estate transaction.
From the seller’s perspective, if the buyer ultimately backs out of the sale, the seller may have every right to pursue recourse and potentially sue the buyer for breach of contract. In some cases, the court may order the buyer to pay the seller’s legal fees and any other damages awarded in the seller’s favor due to the buyer’s negligence in canceling a real estate agreement with no cause. Regardless of if you find yourself on either side of these fences, it would be wise to reach out to counsel for legal guidance sooner rather than later. The real estate attorneys at Enara Law PLLC have countless hours working on these claims and know how to take them on from every perspective. You can reach them twenty-four hours a day, seven days a week, at 602-687-2010 or via email at [email protected]. So call a real estate attorney today, and don’t wait till tomorrow.