Contracts 101: can a seller back out of a contract?
Learn more about contractual agreements in real estate, as well as your role, responsibilities, and obligations as a seller.
As a seller, there could be many reasons you decide you want to back out of a real estate contract. Maybe a job offer in another location fell through, or there has been another change in your circumstances. Maybe it’s just for sentimental reasons. While backing out can cost you money, working with the buyer may help you avoid costly fees or a forced sale.
What exactly is a contractual agreement?
When a buyer puts an offer on your home, and you accept, you both enter into a contractual agreement. This is a legally binding document between the two parties which outlines the details of the home sale transaction.
Can a seller back out of a contract without repercussions?
The short answer — it depends. Whether or not you’ll face any repercussions depends on a few factors:
- Timing. After signing a real estate contract, there is typically a 5-day period in which attorneys will review the agreement. In many cases, you or the buyer may be able to back out during this time without consequences. However, it is always advisable to consult with your attorney or real estate agent in this situation.
- Missed buyer deadlines. If the buyer fails to meet specified deadlines, such as securing a mortgage, you can cancel the sale without repercussions. This is one of the many benefits of having a written contract.
- Buyer’s cooperation. If unexpected circumstances have arisen, you can try to appeal to the buyer and explain why you can no longer go through with the sale. The buyer, if they choose, can release you from the obligation.
In other cases, there may be repercussions. A buyer may choose to release you from the sale, but they may still sue to cover their expenses associated with closing costs. The buyer could also elect to force a sale, which can in turn force you into a lengthy legal process. If the buyer wins in court, you are legally bound to sell the home.
If a homeowner is not ready to sell, a real estate agent may be able to recommend other options to consider that are acceptable to all parties, such as renting the property.