The excitement of searching for a new home can quickly turn to frustration in an unpredictable New York market. You may have your list of must-haves and preferred locations, but finding the place that checks every box is not easy. When the quest becomes time-consuming and overwhelming, you may even consider giving up.
Then you find a place that just feels right, and you make an offer. Everything is going well, and you may even complete the home inspection when, for whatever reason, the seller backs out of the deal. But wait – you signed a real estate purchase contract. Does that mean the seller breached the contract?
Are the seller’s reasons valid?
Sellers don’t put down good faith deposits like buyers do, so there is no financial penalty for breaking the deal, other than losing the sale of the house. However, this doesn’t mean the homeowner can walk away for no good reason. For example, a seller who simply decides not to move after all can face legal repercussions if you decide to pursue the case.
That said, it would behoove you to know the terms of your contract before you sign it. Typical contracts do include clauses allowing both buyer and seller a way out of a deal that isn’t shaping up the way they expected. Some legitimate reasons why either party may cancel the contract include:
- Your lawyer finds a problem with the contract during the five-day review period.
- The contract includes a contingency allowing the buyer to back out for specific reasons, for example if he or she is unable to find a new home.
- Your inspector finds problems with the home for which the seller is unwilling to make repairs or allow price adjustments.
- You are unable to secure financing within the contract’s deadline.
There is also the possibility that you or the seller failed to sign a contract in the first place. Verbal agreements are difficult to enforce, and the sale of real estate is too risky to begin without a written contract.
What happens next?
If you have a signed contract, but your seller backs out in breach of that contract, there are several options available. The first is to get back out there and look for another house. However, you are likely in the hole for the money you spent on home inspection, furniture storage and temporary housing, if you went that far. Therefore, another option is to take legal action to try to reclaim those costs from the seller.
Finally, you may be able to force the seller to abide by the contract and complete the sale of the house. This may be time-consuming and expensive, but your attorney can help you decide if it is to your advantage to pursue the purchase of the property.