Seller is backing out

[admin]

If you are in escrow to buy a house and the seller changes his mind and wants to cancel, are you entitled to liquidated damages?

If the buyer were to back out, the seller would keep the earnest money deposit. So it should be a 2-way street, no?

[The-Shoveler]

Once the Seller agrees to the contract (AS IS, WHERE IS) I think they cannot back out unless the buyer wants them to change or fix something then the seller can simply refuse to, and the buyer would have to take it or leave it.
Anyway IMO

Also there are things the buyer is required to do like sign the waver of contingency etc…, if the buyer does not perform then the seller can back out as well.

[FlyerInHi]

Question is if the seller fails to perform, what is the recourse?

In my case, seller is not getting as much money as he anticipated, so he’s changing his mind.

[The-Shoveler]

Sounds complex, did something get countered etc…

Not sure but you may be able to force the sale.

Anyway sounds beyond my ability, these things are usually not that complex, but the more complexity (and the partly that added the complexity etc.. )..

Anyway sounds out of my league

[spdrun]

Unless you spent money on the sale, move on. Not worth the trouble.

[FlyerInHi]

[quote=spdrun]Unless you spent money on the sale, move on. Not worth the trouble.[/quote]

Yeah.

But the academic exercise is interesting. Seems like the earnest money the seller gets to keep as liquidated damages if buyer fails to perform is a one way street.

[The-Shoveler]

I would say the opposite,

The buyer has several chances to back out, the seller can be forced to sell if everything else is legit (earnest deposit is real and held in deposit by escrow etc.. waver of contingency signed at end of contingency period etc… ).

The rest is on the escrow company.

If there is something flaky on the buyer side then maybe not.

[FlyerInHi]

Shoveler, so you think that I could sue for specified performance and legal fees, and expect to win?

[The-Shoveler]

Maybe (if you really want to buy/own that property).

You may be required to do so as well.

That may be all you win (the seller HAS) to sell to you.

I would make sure my loan doc’s proof of funds etc.. were air tight and the escrow company can be in court to verify same.

It’s really the escrow companies issue, they are the ones I would take to court.

[NotCranky]

This happen to me once. I got an ,attorney to write a threat about breach of contract. Seller’s lawyer contacted me, I made him cry. Opened mediation at local SDAR and got the deal closed. I did give up some little things but if it’s a killer deal that’s o.k.

Do you know why they want to kill the deal? I would find that out. Maybe it’s something so bad you don’t want to deal with it or maybe it’s not that big of a deal like in my case.

[joec]

This happened to my dad once…there was some out of town realtor who sold for below market and every thing was signed…The owner then wanted to back out since it was lower than they wanted… but I think my dad forced the sale since he already had all your t’s/i’s crossed, dotted/signed, etc…(valid contract)…

Like it was mentioned, you can force the sale if all the contract stuff was done, but you should probably consult an attorney…anything verbal is not legally binding.

[njtosd]

[quote=FlyerInHi]Shoveler, so you think that I could sue for specified performance and legal fees, and expect to win?[/quote]

I don’t know but this case caused some changes in CA. It suggests that since the buyer can back out at any time until the contingencies are removed, a residential real estate contract is actually a unilateral option contract unsupported by consideration – and therefore unenforceable. I’m going to look more closely at it before I buy another house :

Protecting Your Purchase Agreement From Termination As a Unilateral Option Agreement

[Geedup]

I’m a realtor and loan officer not qualified to give legal advice but my understanding is that a seller can’t back out if you are performing on your end. If the seller backs out you can arbitrate him at Sdar and he can be liable for specific performance (he must sell you the house) or give you around 3% of the house price or your earnest money deposit . If it’s around day 15 and you haven’t removed everything but your loan contingency he could give you the buyer your notice to perform and then cancel escrow in 2 days at day 17. The seller can’t just decide he doesn’t want to sell to the buyer for no reason without getting sued or arbitrated .

At this point the buyer has already been out inspection and appraisal fees and the listing agent could sue the seller as well for his or her commission if they have found an able and willing buyer.

You should tell your agent to call her Sdar free legal help line to register the property address so the other agent is forced to hire a costly attorney if the situation gets worst.

What day are you in escrow and has the seller given you a “notice to buyer to perform ” have you missed a deadline?

FYI sometimes sellers will try to scare the buyer away by disclosing “foundation problems , needs work, roof leaks, slab leaks , mold ” then deny the repair requests in hopes the buyer will take off on his own so the seller can’t be sued .

Escrow must remain neutral in this situation and can only act if both seller and buyer agree. Buyer could hire an attorney who could file a Lis pendens to cloud the title so
Seller can’t sell to someone else.

What does your agent say ?

Actually here is your answer :

Basically you have a seller breach and unfortantely you need to sue the seller and try to get both sides agents to push the seller is saying they will
Seek commission from them if they try to back out when the buyer is performing .

http://www.zillow.com/advice-thread/Can-seller-back-out-of-signed-contract/518061/

[FlyerInHi]

[quote=njtosd][quote=FlyerInHi]Shoveler, so you think that I could sue for specified performance and legal fees, and expect to win?[/quote]

I don’t know but this case caused some changes in CA. It suggests that since the buyer can back out at any time until the contingencies are removed, a residential real estate contract is actually a unilateral option contract unsupported by consideration – and therefore unenforceable. I’m going to look more closely at it before I buy another house :

http://www.carr-mcclellan.com/insights/protecting-your-purchase-agreement-from-termination-as-a-unilateral-option-agreement/%5B/quote%5D

Very interesting.

Sounds like the seller can cancel.

Of course, as suggested on the link provided by geedup, the seller can be sued by the agent for commissions and by buyer for costs such as appraisal and inspection. But the seller cannot be sued for specific performance unless buyer posted non refundable option payment.

The possibility of being sued for commissions maybe be enough to nudge seller to go ahead with the transaction.

[njtosd]

[quote=FlyerInHi][quote=njtosd][quote=FlyerInHi]Shoveler, so you think that I could sue for specified performance and legal fees, and expect to win?[/quote]

I don’t know but this case caused some changes in CA. It suggests that since the buyer can back out at any time until the contingencies are removed, a residential real estate contract is actually a unilateral option contract unsupported by consideration – and therefore unenforceable. I’m going to look more closely at it before I buy another house :

http://www.carr-mcclellan.com/insights/protecting-your-purchase-agreement-from-termination-as-a-unilateral-option-agreement/%5B/quote%5D

Very interesting.

Sounds like the seller can cancel.

Of course, as suggested on the link provided by geedup, the seller can be sued by the agent for commissions and by buyer for costs such as appraisal and inspection. But the seller cannot be sued for specific performance unless buyer posted non refundable option payment.

The possibility of being sued for commissions maybe be enough to nudge seller to go ahead with the transaction.[/quote]

Again – I’m not a real estate attorney. But, hypothetically, if no contract is formed (as is suggested by the Steiner case) until buyer supplies irrevocable consideration, then no one has a cause of action (buyer, agents, etc.) until that time.

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