That is when things can become even more complicated and expensive. If you are thinking about selling your home, find out what you can do to protect yourself if there is a last minute problem.
In some cases, a seller can take legal action if a buyer refuses to complete a sale. Limitations as to what a seller can do are typically written into the initial sales agreement, and probably narrow the options, so one must read the contract carefully.
If the buyer decides not to go through with the home purchase, a seller can potentially:
- Retain the initial deposit money payment and terminate the contract;
- Resell and sue for breach of contract; or
- Bring an action for specific performance.
Most potential buyers often have contingency clauses written into their contracts which are legal ways of “backing out” of the contract at no (or nominal) cost to the buyer.
Financing or the lack of it, thanks to a mortgage request turned down, is a common reason for canceling a home purchase contract. If the contract is conditioned on the buyer successfully obtaining a mortgage, and the buyer makes a good faith effort to apply for one but is then turned down, then the contract is cancelled and the buyer is not at fault.
Home inspection contingencies are also valid reasons why many deals fall through.
If the inspection turned up defects, and the buyer is not willing to deal with those defects or the two of you cannot successfully negotiate repairs or a price reduction, then the prospective buyer is within his rights to back away from the purchase.
There could be a few other reasons why a buyer wants to back out. As a first step, you can make sure that both of the real estate agents involved are in touch with each other and communicating amicably. You can also get in touch with the buyer directly to fully understand his or her concerns. You are free to negotiate and explore any concessions you can offer to keep your buyer on track to close.
That is why it makes sense to have a real estate lawyer review the contract and inquire about your recourse options, including the ability to sue your buyer if necessary.