Can the seller back out of a signed Purchase and Sale Agreement?

Question

I have a signed P&S with all contingencies met. The SELLER is now stating they won't close because they failed to read a refinance agreement they took on this, their existing house, that carries a prepay penalty. This penalty kills the deal on the sellers new home financing. Nine days till closing and if they don't sign I will lose my lock on a pretty darn good financing deal of my own. I will contact an attorney the first of the week. But in the mean time anyone have thoughts on this?? The P&S seems locked up in my favor. They can't just back out can they. Can they be liable for my legal expenses and any possible rate increase on my loan if I lose this lock?? Thanks

Answer 1

That depends on your Real Estate Law in your State. If you are working with a Realtor ask him/her for advise.They know the law and probably know how to proceed. If not contact a Real Estate attorney.

You might want to try to work it out with the seller. Everthing else will become very expensive for you and the seller. Yes theoretically the seller is in default of a legal binding contract. That means he would be responsible for any damages resulting from this. Those costs might be higher than his pre pay penalty.

If you can talk to your Realtor and/or Real Estate Attorney to point out to the seller how much it would cost him if he is not going ahead with the closing, it might change his mind.

If you can not get any further you at least are in the lucky position that we have a buyers market right now and it should not be to hard to find a replacement property (may be an even nicer one?)

Answer 2

to force them to go through with the sale, at the agreed upon price in the contract. Not certain if you want to do this though, as it could be expensive. In the end, the seller would probably be assessed the legal fees, but do you really want a home that you had to drive the sellers out of? The might put nasty surprises in it. A home inspection shouldn't cost more than about 150 or so. So, we are talking small claims court on one, or superior court on the other. Is it really worth the aggravation?

Answer 3

Not an attorney so not sure about liable for your rate increases but... could be subject to damages. All is dependent on the contract laws in your state. They have passed all contingency periods so it sounds like their failure to read is not your problem and, they are under contract to sell the house. However, think how you can still make this work and be a win-win and not be a hard a-- about it, if you can. If you really want the house and rate, then go for it. Seek legal counsel to make this a win-win or to go after them in a manner appropriate for the circumstances. What a hassle, though!!!

Answer 4

Yes they can back out.
However you can bluff them into following through.
You can either personally or through an attorney lay out all of the unspeakably horrible consequences that will be brought to bear if they do not play ball.
I personally have had great success with the bluffing.
I personally would not actually follow through with the ugliness unless it meant a whole lot of money to me.

Answer 5

you have a signed contract legally binding for X amount of dollars for X property, because they did not know they had a prepayment penalty upon the home is of no consequence to you but is their problem.