How Can a Seller Cancel a Real Estate Transaction?
As complicated as real estate transactions can be, it might sometimes feel surprising that any of us ever complete one. Luckily, even with all of the potential financial and legal pitfalls, most real estate transactions do close. But what if the seller decides to back out? Can the seller actually cancel once the transaction is open?
The simple answer is generally no, a seller cannot back out of the sale of a home unless it is done pursuant to the contract. There is no inherent right of a seller to change their mind. A seller can cancel only in the following limited situations:
- The contract was not yet signed by the Seller. In order for a transaction to proceed both parties must execute the contract.
- One of the seller’s contingencies was not met. Contingencies, written into the contract, function as a legal “escape” in the event that the deal is not working out for the seller. For example, the seller might specify that the sale of the home is contingent upon the seller finding another satisfactory place to live.
- The buyer fails to remove a buyer’s contingency, such as securing a loan to purchase the property, and the seller thereafter properly cancels under the procedure set forth in the contract.
- The home inspection uncovers some problems. In this case, the buyers might request repairs or a credit from the seller to cover the cost of repair. The seller can refuse to provide a credit or make repairs, in which case the buyer might cancel the transaction which relieves the seller of the obligation to sell the property.
If one of the above events occurs, seller or buyer can cancel the transaction. There are specific steps that must be followed in order to cancel the transaction, however, and your real estate agent should handle those steps on your behalf.
Occasionally, a seller might try to get out of the contract for another reason, and that situation can end up in court. The “specific performance” provision in most real estate contracts will legally force the sellers to complete their end of the transaction, should the buyers wish to take them to court.
Forcing a seller to sell the property is an expensive alternative for buyers. But as available properties become scarce, more buyers are seeking this remedy. A seller should seek legal advice before making the decision not to go forward with a sale because there are significant potential negative legal consequences for this action. The seller could end up not only having to sell the house, but also be responsible for the buyer’s attorney fees and costs.
Call our real estate attorneys for more information on buying and selling real estate. In particular, ask us to review any sale contract before signing it, so that we can best protect your interests in the transaction. If you do need to cancel a sale, we can advise you on how to legally proceed.