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yash_patel173

Does seller have the right to back out?

4 years ago

We signed a contract to purchase ($700k) home and entered into escrow. The home inspection showed a lot of repairs, so we decided to cancel the contract. My realtor sent “Cancellation of Contract” to the seller.

The seller called us back saying that they are willing to fix the repairs if we are interested in moving forward. We decided to move forward and ordered an appraisal. The appraisal came at $660 and now the seller is not happy. Our contract stated that if the appraisal comes lower than the contract price, we will pay an additional $10k over the appraised value. In this case, it is $660+$10=$670. Now seller is trying to use the cancellation notice sent by us earlier against us.

Seller’s agent’s response after appraisal: “As you're aware the Buyer cancelled this escrow on 12/23/2021. If your Buyer would like to resurrect this transaction the Seller is willing to, under the at $700.”

Buyer’s agent’s defense: “You are correct that we sent in a cancellation on 12/23/2021. However, you reached out via phone and asked us what we could do to keep the transaction going. In "Good Faith" we retracted our cancellation. I have an email correspondence with you from on Jan 7th stating "We are back in play with this file". We conducted the appraisal to proceed with the file. We provided the lender everything needed to prepare for loan docs. So to reiterate, the cancellation was not finalized AND was retracted. Technically, the seller would have to abide by the contractual obligation of the RPA and honor $670,000 for the purchase price.

Who is right in this situation?

Comments (6)

  • 4 years ago
    last modified: 4 years ago

    I think in most contracts you will be limited to retrieving whatever funds you have deposited. You may be able to sue for "specific performance", forcing them to sell you the house according to the contract. I don't think the courts like to enforce this if the seller is planning to remain in the house rather than sell it to you. They would be more likely to enforce it if they breached your contract to take another current higher offer after they have accepted yours. I think most real estate agreements are worded to pretty much allow either party to walk away until the actual closing with the only potential penalty being loss of the money deposited if it is the buyers who walk away.

  • 4 years ago
    last modified: 4 years ago

    Your agent is right. That doesn't mean that you will get the house or that you can force them to sell it you.

    There should have been a signed document canceling the cancellation. A court would probably accept the email exchange as sufficient agreement between the parties. The subsequent activities would be acknowledgement by both parties of the desire to move forward. If the seller wasn't prepared to move forward after receiving the cancellation notification, they should have returned the deposit to you. They didn't. They allowed the sale process to continue and an appraiser in their home.

    Unfortunately, you cannot force them to sell the house to you. The best that you can do is to demand return of your deposit and your costs. They will most likely return your deposit without a lot of trouble because the funds are sitting in the broker's escrow account for this very reason. Getting your costs will require a trip to small claims court. Keep all the documents including copies of the email chain. You will need them in court. Your seller has acted in bad faith.

    I know you are out time and money. If it were me, I would move on to something else.

    Karma will result in these seller's getting less for the house than the appraisal. They've gotten greedy and it will bite them. Everyone will learn why the house is a back on the market. Agents will be loath to do business with them.

  • 4 years ago

    I am friends with a number of real estate agents and I know of two who were in transactions where the seller got up and left the closing because they decided not to sell. I know of at least one where the buyer just did not show up to closing. In the first cases the buyers got the escrow money back, and in the latter case the buyer was limited to the funds in escrow and that was it. Nobody may have pursued it any further of course, but probably because there was little point. I think it would be very difficult to Force the seller to turn over the house, and as far as I understand how it usually works, it would be to stick to the transaction as written, you would not get any damages or anything.

    And I agree with homechef59, people pay attention to whether a house has been under agreement and has returned to the market and it sets up red flags. It could be for any reason, even a relatively innocent legitimate reason, but often that house will be "tainted" by it.

  • 4 years ago

    If your contract provides specific performance as a remedy for a breach by seller, many courts will enforce it on behalf of a BUYER - but not for a seller. I have never read a case like this where a jury (or judge if it is a bench trial) made a distinction based upon whether the seller was going to remain in the home. If you have a vaild right of specific performance, and the cancellation of the contract was legally revoked, you would have a good chance of having it enforced. On the other hand, courst are unlikely to enforce a right of specific performance on behalf of a seller.


    The reasoning is that real estate is unique, and the only way to make a buyer ”whole” if a seller breaches the contract, is to enforce specific performance. If the only remedy was to give the earnest money to the buyer, that amounts to no remedy at all. Giving a person his or her OWN money back would leave buyer without an actual remedy.


    Obviously, it is very different to give a seller the earnest money - because the earnest money was buyer’s money. The seller actually receives something of value to compensate him/her for a buyer’ failure to perform under the contract. If all that will happen is that a buyer will receive his or her own funds back, what incentive is that for a seller to honor his/her contractural obligations?


    A key in this situation is whether your cancellation was legally revoked. The other issue I see is how the exact language of your contract is drafted related to what happens if seller agrees to ”fix repairs.” I am confused as to why seller agreeing to fix items that needed to be repaired triggers the appraisal provision of your contract.


    However, I didn’t sleep last night - and maybe you’re point is that seller agreeing to fix repairs = cancellation of your cancellation = contract still valid = provision re: low appraisal causing revision of purchase price is still valid = amendment of purchase price to $10,000 over appraisal value. If that is correct, then the only issue is whether your cancellation was legally revoked/canceled.


    You spending money on an appraisal + seller permitting access to property for appraisal are strong facts supporting your position.




  • PRO
    4 years ago

    Written & signed addendums have more weight than verbal and agent emails.