Is it a Breach of Contract if a Buyer Backs Out of a Real Estate Purchase?
For months, the purveyors of clickbait have been posting headlines about a real estate crisis, but
they do not seem to agree about the nature of this crisis. Housing prices are astronomical, both
for purchase and for rent, making it virtually impossible for people who have never owned a
home before to save up for a down payment while also paying rent on their current
accommodations. People are also struggling with lots of other debts; after years of putting most
of their money toward rent and making the minimum payments on credit cards, their
unimpressive credit scores make it even more expensive to borrow the money that lenders are
willing to lend them.
All of this means that not everyone who gets to the phase of making an offer to buy a house can
finalize the purchase. The real estate purchase process has several exit ramps built in; it is
possible, in some circumstances, for buyers and sellers to back out of the transaction without
completing it. While the “will they or won’t they” phase of a real estate sale brings plenty of
stress, sellers can suffer financial losses in the process, too. To find out more about protecting
your financial interests if a buyer gets cold feet about a real estate transaction, contact a
California real estate law attorney.
Why Buyers Walk Away From Real Estate Deals
Buyers must go through a long and rigorous approval process to secure a mortgage loan. Real
estate agents always tell buyers not to get emotionally attached to a property until after closing.
Things might not work out for various reasons. Sometimes the sale does not come to fruition for
reasons that have nothing to do with the property. For example, the buyer might not be able to
sell their old house to get the money for the down payment. At the last minute, the buyer might
decide not to move so far away from their family. Whether the buyer owes the seller any money
for this change of heart depends on when the buyer backs out.
Who Keeps the Earnest Money When a Buyer Decides Not to Buy?
Some real estate purchase contracts have contingencies, which means that the buyer is only
obligated to complete the sale if the seller fulfills certain conditions, such as making repairs to
the property or covering the closing costs. If the deal falls apart because of the seller’s non-
fulfilment of a contingency clause, the buyer keeps the earnest money. If the buyer backs out of
the deal through no fault of the seller, the seller usually keeps the earnest money. Depending on
how late the buyer backed out, the seller may even be able to sue the buyer for breach of
contract.
Contact SNR Law Group About Keeping Your Divorce Simple
A real estate attorney can help you accomplish your purchase of a house with as few
complications as possible. Contact SNR Law Group in Tustin, California to discuss your case.
Sources: https://www.bankrate.com/real-estate/what-the-seller-can-do-after-a-homebuyer-backs-out/#finding