Can a seller back out of home sales contract?

Can a seller back out of a signed home contract (Home A) because the home (Home B) he was purchasing is no longer available? We, as the buyers of Home A, have sold our existing home based on our contract.

4 Answers

  • 1 decade ago
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    Since no one here has actually read your contract ... any of the normal range of options may or may not be available to you.

    Your contract may contain clauses that limited or even waive options normally available to you. You may also have an arbitration clause in the contract. And your purchase could have been contingent on his purchase going through. Read your contract thoroughly before opening your mouth and inserting your foot.

    You could, for example, either find another house to buy (he gives you your escrow back), delay your own sale closing while he finds another house to buy, sue him for breach of contract, sue for specific performance (make him sell you the house), sue for actual damages (a storage unit and a rental less the cost of what it would cost you to live anyway, a loan rate increase, housing prices went up, etc), or you could go ahead with the purchase as planned but do a U & O (use & occupancy with payment) which would allow the seller to remain in the home for a set period of time while he hunts for another house, or you migh be able to get him to agree to pay your actual costs during gap period from when your buyer closes to when you close on another place.

    All of this is assuming that your contract hasn't somehow limited or eliminated your remedies in some way.

    You also have to look at your contract and to local law to see exactly who is supposed to pay all the legal fees. You may be amazed to find out that you are responsible for your own legal fees if the sellers actions were not willful. That means he didn't back out on a whim or for some bogus reason. He probably isn't any happier about this whole situation than you are. You may not have noticed, but the two of you are in the exact same boat. Both of you counted on your purchases going through.

    "He will work harder for the bigger money because he will take 1/3 of the proceeds."

    That's not how it works. Damages are not pulled out of thin air, and actual damages can be tricky to prove. What if rates drop and/or housing prices drop. If the buyer ends up with a better house for less money, there goes 98% of the supposed damages. He could end up paying a huge retainer that would be credited against proceeds, and have the proceeds not be enough to cover the retainer. You are also assuming there is a brigade of lawyers ready and willing to take this on a contingency basis when you don't even have a clue what the contract says.

    You have to weigh what your contract says against how badly you want this specific house, what each option will cost you in time AND money, and add in the sellers willingness (or lack of) to help fix this situation.

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  • 1 decade ago

    As a licensed Realtor in Michigan, my answer applies to Mi. If the seller had language in the purchase agreement making the deal contingent upon them finding and closing on their "house of choice" then they could enact that contingency if the house they wanted became unavailable. If there is no contingency language (ask your agent) they have committed specific non performance. You would have to sue, and win, for this to be enforced. Having sold your existing home you obviously don't have a lot of time before you need a new dwelling. If your state has similar laws then have your agent express your intent to pursue this to the seller's agent. I won't give you legal advise but as an agent I cannot stand when one party ignores the rights of the other. If it were me, my attorney would be about to become familiar with the seller's attorney.

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  • 1 decade ago

    He can refuse to close on the house. You need to make sure that there isn't something in the contract that allows him to do this and you signed in agreement.

    If not you can sue him for breach of contract and seek damages.

    You will need to have a attorney do this for you.

    Look for a attorney who is heartless and will take the case based on a percentage of what you recoup. He will work harder for the bigger money because he will take 1/3 of the proceeds.

    Good luck but start making other arrangements now so you have a place to live. This process can take a year or more.

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  • 3 years ago

    positive she will be able to, it continues to be her sources. If she defaults on the deepest loan, the lender will foreclose and also you'd be evicted. with somewhat of luck your settlement will address those circumstances, it truly is why having an criminal professional evaluate the settlement is crucial.

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