The Legal Implications of Backing Out of a Real Estate Deal

Real estate purchases are more complicated than many people think. After an offer is made, a seller may take weeks to accept it. Once the offer is accepted, the parties must complete the paperwork. Depending on the nuances of the deal, this may take several weeks.

A lot can change between agreement signing and sale and closing. A buyer may regret their decision, feel that they are overpaying for the property, or have their financial situation change. As a result, they may want to back out of the deal.

What Happens If a Party Walks Away From a Real Estate Deal?

Both real estate buyers and sellers must realize that there are legal consequences of backing out of a real estate deal. Once the offer and counter-offer are formally accepted, the buyer and seller are bound by the terms of the agreement.

If a buyer backs out, their actions can trigger a series of events, and other parties may suffer losses. In such circumstances, the aggrieved party can withhold the deposit and sue the buyer for damages. Damages to a seller may include lost opportunities to sell the property to another buyer or loss of deposit on another home the seller intended to purchase.

A seller can claim damages for losses caused due to changes in market conditions. They may also demand compensation for ongoing carrying costs for the property and mortgage-related fees and costs.

It’s not unusual for a buyer who backs out of a real estate deal to pay the seller a higher amount (than the deposit) to compensate for damages. To sum it up, backing out of a real estate deal can be expensive and affect the buyer’s ability to close real estate transactions in the future.

If you want to walk away from a real estate deal but cannot negotiate an amicable termination of the agreement, you have two options to terminate the transaction legally.

Backing Out of a Real Estate Deal Legally

You can walk away from a deal if you prove that the sale was conditional and the conditions you and the buyer agreed to weren’t fulfilled in time.

Another way you can back out of the deal is if you can prove that the seller made an inaccurate statement about the property’s condition or hid crucial information about the property, such as it was affected by a flood or fire or had a mold problem.

Have an Attorney on Your Side During a Real Estate Transaction

Real estate laws are complex and are constantly changing. A real estate transaction attorney near you in Santa Rosa can help you navigate the legal landscape. Your attorney can draft documents and advise you on legal matters. Your lawyer can negotiate with the other party if the deal runs into trouble.

The Johnston & Associates team consists of seasoned real estate transaction attorneys. Regardless of the complexity of a real estate transaction, our attorneys can help ensure smooth sailing. To make an appointment, call (707) 545-6542.