There are some instances when sellers can step out of a deal
Cervone Deegan + Associates knows that buying a home in today’s market conditions can certainly be stressful enough due to the level of competition. Many buyers are mostly concerned with what they can do and how much money they can offer so that they can beat out any competing offers and win the sale. However, as infrequently as it happens there are not many buyers that think about what if the seller decides to back out of the sale on their end and if that is even something they can do. If a buyer withdraws for a reason that is due to anything outside of their contingencies then they are likely to lose their earnest money deposit which can be significant, but what penalties are there for sellers if they decide to back out? Here is a closer look at these scenarios.
Why Sellers Could Back Out
There may be several reasons why a seller changes their mind and decides not to sell but the most common one is that they cannot find a good enough replacement home. There are times where a seller may be less than ethical and choose a better offer that comes along afterward the one they agreed to originally. This doesn’t mean they can do it without repercussions.
When Sellers Can Withdraw Without Penalty
There are indeed instances where the seller can safely back out without any penalty and these include:
- The purchase and sale agreement has not been signed yet.
- The purchase and sale agreement is within the review period. This is typically a few day window where buyer and seller attorneys have the chance to review the contract.
- The seller inserted an escape clause in the contract, commonly known as a contingency, such as them to find a suitable new home first for example.
The buyer didn’t do due diligence and breaches contract terms. Each contract has specific terms, dates and conditions especially for the buyer to follow in a timely fashion. For example if the buyer does not lock in financing by the agreed upon date that can be an out.
- The buyer makes requests beyond the seller’s willingness to comply. This can happen more often at the home inspection. It could be that the buyer requests a list of things to do and the seller decides to simply not agree to any of them. The buyer at this point will either accept that no work will be done or agree to disagree with the deal getting canceled.
When A Seller Cannot Back Out
Once the purchase and sale contract is signed and you are past the few day attorney review window then it is quite hard for a seller to back out aside from the above mentioned reasons. If a seller flakes on the sale, laws do protect buyers so that they could take the seller to court to force the sale to go through or sue for damages for breach of contract. The problem here is that if a buyer decides to go this route it will take an investment of both time and money to process. Most people would just let it go and move on with their plans to purchase another home.