Breaking home sale deal can be costly in court
If a written contract is already signed, can the seller cancel or nullify it? I have signed a contract with a buyer and would like to cancel.
Got a bad case of seller's remorse, have we? Well, let's get to
one key point immediately: A signed contract is a legal obligation
-- albeit not always an unbreakable one -- but a legal obligation
nonetheless, and that holds a lot of water in court.
Not to say that some buyers -- particularly with the current universe of for-sale inventory broader than it's been since the 1990's -- won't just shrug their shoulders, back off and move on to another property, particularly if they haven't tied up too much time, emotion or money (on inspections, financial arrangements or selling their current home, etc.) on your house. But others will hold fast to that signed agreement bearing your name.
There are a few potential outs. If you added a contingency
into the contract saying the sale of your home is contingent on
you finding a replacement home, well, at least you have some ambiguity
to work with. Or, if you thought to stipulate other specific requirements
in the contract that the buyers haven't met or have met only loosely,
then you have more wiggle room. Generally, though, there are far
fewer outs for sellers in home sales than for buyers.
Here's a likely scenario of what might happen should you decide to say "sorry, no deal" at this late stage of the game. The buyers, or their attorney, would write a letter to you explaining the legal consequences of not closing on the agreed-upon sale. If you still don't budge, the attorney may file a "specific performance" lawsuit against you, possibly with a "lis pendens" against the title, which would not only keep you from selling your house to another buyer; it would keep you from refinancing it. I'd hate to see your own hands tied thusly.
If the case does go to court, laws tend to support the buyers. In some instances, the buyers can be persuaded to accept some compensation in addition to just getting their earnest money back. But any way you look at it, things can get ugly in a hurry.
Don't expect your agent to be too chipper about your decision either. You should check the language of your listing contract to make sure you're not violating that as well. The agent can't force you to actually sell your house, but the listing-agreement language may entitle the agent to the equivalent of partial commission or some other compensation, even if the buyers agree to back out and the house doesn't sell. Better see a real estate attorney.
First, however, take this opportunity to revisit the
reasons you wanted to sell the house in the first place. That list,
I assume, is still longer than the list of reasons you wanted to
stay. In the end, most people in your situation will finally conclude
that their initial instincts to sell were right on.
Yes, T.P., the act of selling the family homestead can be a very trying time emotionally for the seller, as the loss of the past and the uncertainties of the future loom large. But your signature on that contract may spell out the fact that it's time to move on.
I wish you luck.
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