Purchasing or selling a piece of real estate is often an individual or family’s largest financial transaction. Since so much is on the line, frustration can run high for both parties if the transaction does not move forward. Whether a new job, financial problems, health issues or a change of heart are to blame for either the seller or buyer attempting to back out of the deal, both parties can benefit from a basic understanding of remedies for each party when one attempts to cancel the contract.
Before diving in, it is important to note the exact answer will depend on the details of the contract, the following are generally true.
Remedies for buyer
If a seller attempts to get out of a contract, the buyer can generally sue for performance. This essentially means the buyer can force the seller to sell the property. The legal justification for this option is rooted in the argument that the buyer may not be able to find another property that is similar to the one currently under contract.
If this does not work, the buyer could sue for damages.
Remedies for seller
If a buyer attempts to get out of the contract, the seller can sue for damages. This is unlikely to be the full value of the property as it is likely the seller could find another buyer, but the award could still result in a sizable settlement.
The contract may include a liquidated damages clause. This provision will outline what happens in this situation.
Negotiations can help
In some cases, both parties can negotiate an alternative solution. This might be an option even if a liquidated damages clause is present. If negotiations are not fruitful, the parties may move forward with litigation.