Buyers’ Rights When a Seller Backs Out of a Real Estate Deal

New Home

Finding your dream home can be a long and exhaustive search for prospective home buyers. With your list of ‘non-negotiables’ and ideal locations, at times it may feel like you’ll never find the right property.

Even more agonizing than a fruitless home search is finally honing in on the perfect place only to have the seller change their minds at the last minute. While this can cause you (the buyer) excruciating disappointment, take time to put things in perspective before taking any action.

It’s possible that the seller has a legitimate reason for backing out of the sale, in which case you may do best to move on and expend your energy elsewhere. Meet with the sellers, if possible, to determine their reason for cancelling the sale. Some potentially acceptable reasons may include:

  • Their moving plans were railroaded and they have nowhere to live if they sell
  • Job transfer(s) were revoked
  • They’ve changed their minds about moving into a retirement community
  • Unexpected financial difficulties

Sometimes homeowners have very deep emotional ties to a home that has been in their family for generations. Their sentimental attachment may cause them to feel that they simply cannot go through with the sale of the home. Another potential game changer is that the sellers aren’t sure if new owners will give their well-loved family home the proper upkeep and attention that it deserves.

They may also worry that you won’t come through with the down payment or that you will have trouble getting a mortgage loan. In any of these cases, sitting down with the sellers may reassure them that you will care for their home just as they do. You may also wish to offer them proof of your financial stability in order to ease their apprehension.

On the other side of the coin is the possibility that the seller received an offer that exceeded yours. Even though you may have already signed a contract, the seller may feel that the higher offer is worth backing out of the original deal they made with you. It’s definitely not a very honorable thing to do, but it does happen.

What are my rights as a rebuffed buyer?

If the seller decides to unethically cancel the real estate deal you had in the works (i.e. without any of the legitimate and understandable reasons listed above), you do have some rights as the potential buyer, especially if you had a contract that had been signed by both parties.

However, first check your real estate contract for something called the ‘kick out’ clause. This clause is typically used when a seller gets an offer that is contingent on the buyer selling their current home first. While the seller waits for the buyer to sell their home, they can keep their home on the market. During this time, if a new buyer makes an offer without a contingency, the seller can ‘kick out’ the first buyer in favor of selling to the buyer without contingency.

Check through the contract closely, because sometimes very specific language will be used in the ‘kick out’ clause, which may allow the seller to cancel the contract for other reasons.

Barring any legitimate ‘kick out’ clauses, you can send a letter to the seller (via your attorney) demanding that they cover any expenses you had already paid related to the sale. Home inspection, property survey, appraisal, title services and credit report fees are some of the expenses you should ask to have the seller repay.

Your attorney will be able to help you decide if you are satisfied with demanding return of your expenses thus far in the process or if you wish to be more aggressive and sue for specific performance of the contract.


Image credit: Mark Moz

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