When Can A Seller Back Out Of A Deal?
Buying a home these days in today’s market conditions can be stressful due to the tough competition. Most buyers are focused on what they can do and how much they can offer so that they can beat out the competing offers and win the sale. However, as rare as it can be, not many buyers are thinking about if the seller may back out of the sale on their end and if that is even possible. Should a buyer withdraw for a reason that is outside of their contingencies they are likely to lose their earnest money deposit which can be significant, but what consequences are there for sellers if they back out? Here is a closer look.
Why Sellers Back Out
While there may be several reasons why a seller may decide not to sell, the primary or more common one is if they cannot find a good enough replacement home. There are instances where a seller may be less than ethical and choose a better offer that comes along afterwards. However, this doesn’t mean they cannot without repercussions.
When Sellers Can Withdraw
There are instances where the seller can safely back out without penalty. They include:
-Contract has not been signed yet.
-Contract is within the review period. This is typically a few day period where buyer and seller attorneys have the chance to review the contract.
-Seller planted an escape clause in the contract. This is commonly known as a contingency such as them to find a suitable new home first for example.
-Buyer does not follow contract terms. Each contract has specific terms, dates and conditions especially for the buyer to follow. For example if the buyer does not secure financing within the agreed upon time frame that can be an out.
-Buyer makes requests beyond seller’s willingness. This can happen upon the home inspection. It could be that the buyer requests a list of things to do where the seller decides to simply not do 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 contract is signed and you are past the few day attorney review period then it is hard for a seller to back out aside from the above mentioned reasons. Should a seller flake on the sale, laws do protect buyers enough so that they could take the seller to court to force the sale to go through or sue for damages for the breach of contract. The issue here is that if a buyer takes this route it will take an investment of time and money to process. Most will just let it go and move on with their plans buy another property.