Can the Seller Break a Purchase Contract?

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It’s a common scenario in a hot market – the buyer has their next home within their grasp, but then the seller backs out of the contract. How can this happen and what can buyers do about it?

Home sellers back out of signed contracts because of a higher offer, higher appraisal than the buyer’s offer or a financial or emotional problem, such as job loss or the death of a family member, according to Some sellers simply have mixed feelings about moving or resent the buyer’s demands.

If a seller wants to back out, there are three ways to do so without expensive consequences.

  1. If the buyer fails to perform, such as not being able to obtain financing, failing to provide a deposit, or missing the closing date. However, the seller should have a provision in the contract regarding notice to the buyer to perform and then comply with those provisions to get away without penalties.
  2. If a written contingency hasn’t been met by the buyer or if the seller included a contingency on being able to buy another home, but they’re unable, they can walk away from the purchase contract.
  3. Last but not least, the contract should include an attorney review clause. They may find something in the contract that allows the seller to bail out.

Otherwise, the seller may be ordered by a court to pay the buyer a large amount of money or make the seller follow through with the sale.

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