What do we do when our Buyers Backed out of Real Estate Contract 14 days in?

Question

We signed our contract and the buyers had 10 days to change their minds without losing ernest money. We already have our title commitment and appraisals and surveys done. They called today to say they want to back out. What can we legal do? We live in Texas.

Ok, the buyers mortgage company didn't require an inspection and the buyers said they didn't want to pay out of pocket for one. That is why we had a 10 day back out date. On the 14th day they said they found another house.

Answer 1

THE SHORT ANSWER IS THAT 10 DAYS IS MUCH TOO SHORT A PERIOD OF TIME FOR THE BUYERS TO CONDUCT THEIR INSPECTIONS AND RECEIVE THE WRITTEN REPORTS.

YOUR AGENT DID A VERY BAD JOB ADVISING YOU THAT 10 DAYS WAS ENOUGH TIME FOR THE BUYERS TO MAKE THEIR INSPECTIONS AND RECEIVE AND REVIEW THE REPORTS INSPECTION REPORTS..

The answer in more detail:

It depends on the language of your contract.

In a properly written real estate contract the buyers must remove their contingencies in writing.

If they fail to remove their contingencies within the specified time, you have the right to notify the buyers in writing that you will cancel the contract, return the buyer's deposit and put your home back on the market.

Unfortunately most standard contracts that I have seen make the contingency removal process passive, in other words the contingencies are removed by the passage of time, once the contingency period of time has elapsed.

The problem that I have with this language is that it is very easy for a contingency to be removed that the buyer did not intend to remove.

The result is disputes of the type that you have right now.

You should not have made any commitments until the buyers removed their contingencies in writing.

Your real estate agent has done a bad job of advising you.

This is a problem that I find with most real Estate agents. They want to make contingency removal passive and let contingencies be removed by mistake.

The result is disputes that never should have happened.

Also, real estate agents want to make contingency removal periods too short for the buyers to make competent inspections and receive the reports of those inspections..

10 days is much too short a period for a buyer to conduct their inspections competently and get reports back in time for them to review those reports.

In my experience most termite companies, property inspection companies, mold inspection companies, lead inspection companies, asbestos inspection companies and radon gas inspection companies have lead times of at least one week just to get an inspector out to the property.

It takes two or three days to type and deliver the reports to the buyer. Already 10 days have elapsed and the buyers have not even seen a report. The buyers cannot make a competent decision until they have had adequate time to read and review those reports and as questions of the inspection company where they have questions.

If you are doing something like mold inspections, air samplers must be set up and run in the property usually for 24 hours, and surface samples must be taken and sent back to a laboratory where a technician studies the fungus samples under a microscope to identify them and count them. This often takes several more days.

When I have a mold inspection done it often takes me 7 days to get the inspector out to the property and 7 more days to get the report back. That is 14 days right there before I even have the opportunity to see the report.

Lead tests and asbestos test also often take 14 days or longer before you get a report back.

Your real estate agent was very unrealistic to advise you that 10 days is enough time to do the proper inspections on a house.

That is one of the big problems with real estate agents they do not want to give the buyer enough time to do the competent inspections that they must do on the house.

Then they create a huge mess when the buyers discover that they cannot complete their inspections within 10 days.

Some real estate agents also want the buyers to accept the seller's inspections.

I never agree to this. The seller's inspections are merely designed to protect the seller from charges that they failed to disclose defects in the property. Seller's inspections are never a sufficiently competent inspection for a buyer to rely on those inspections only protect the seller, not the buyer.

I always insist on my own inspections when I buy a property. I always insist on enough time to do the inspections, get the reports back and give myself enough time to review the reports.

That is usually approximately 21 days in most cases.

I have my attorney write my offers for me and include that language. If the seller or the seller's agent is not willing to accept that, I withdraw my offer and purchase another property with a more realistic seller and seller's agent.

My advice to you is get a written agreement from the buyer that they are cancelling their contract in exchange for your written instructions to the title and escrow company to release their deposit back to them.

This is very important because the current contract can create a cloud on the title of your property and make it very difficult to sell.


One of the responders said to keep their deposit.


This responder has never been in a dispute with a buyer who is represented by a competent attorney.

If he had , he never would have told you to keep the buyer's deposit

I recommend that you resist the temptation to try to keep any portion of the buyers deposit.

The buyer can fight you in court and tie you up for months if you try to take their deposit.

A good attorney for the buyers will be able to demonstrate than 10 days was an unrealistically short period of time and that their cancellation in 14 days was a reasonable period of time.

I have been in deposit disputes as a buyer. The courts take a dim view of some of the practices of real estate agents. Also Judges have bought homes themselves and have often found themselves on the receiving end of some of the tactics used by real estate agents.

In my experience, Jjudges despise those tactics.


Most judges will be very difficult to persuade that 10 days is a reasonable period of time to do the inspections.

If you try to keep that deposit, the buyer's attorney will make you look very bad in court. The Judge will almost certainly rule against you.

If you wind up in a lawsuit with a jury trila over this any half way competent attorney will make you look awful to a jury.

DO NOT EVEN THINK ABOUT TRYING TO KEEP THE BUYER'S DEPOSIT.

If you have any losses from this transaction I recommend that you demand that the real estate agents involved reimburse you for your losses out of their own pockets because they advised you very badly and it appears to me that they advised the buyers very badly as well.

IF YOU HAVE TO SUE THE REAL ESTATE AGENTS INVOLVED FOR YOUR LOSSES BECAUSE OF THEIR BAD ADVICE I CAN GUARANTEE YOU THAT JUDGES AND JURIES WILL BE FAR MORE SYMPATHETIC TO YOU IF YOU DEMAND THAT THE REAL ESTATE AGENTS, AND NOT THE BUYERS REIMBURSE YOU FOR YOUR LOSSES.


The buyers do not know what period of time they need to do inspections. The real estate agents do know.

If the real estate agents involved with this transaction do not voluntarily reimburse you for your losses out of their own pockets I recommemd that you contact an attorney who specializes in real estate law and have him contact the real estate agents involved and explain to them why they would be very wise to reimburse you for your losses.

You may show this answer that I have given you to your attorney and let him decide what is best for you to do.

Answer 2

I do not think the courts will award you specific performance. What you should do is keep the ernest money and put the property back on the market. That is what the ernest money is for. The buyers agreed to forfeit that money if they did not go through with the purchase. Good luck

Answer 3

you have many options, it just depends on how far you want to go. You can let them go and get back to looking for someone to buy your home or on the other end of the spectrum you can sue them for specific performance.

sometimes it's just best to move on.

Answer 4

Just find another buyer. If you decide to keep their deposit and they fight it, you cant sell until it is resolved.

Answer 5

nothing