Home Buying in Pittsburgh>Question Details

Sherri, Home Seller in Pittsburgh, PA

Can a buyer terminate a real estate contract 6 days prior to closing after all inspections have been done, addendums agreed to and signed?

Asked by Sherri, Pittsburgh, PA Fri Jun 17, 2011

All contingencies were either waiver or met. The buyers got into a fight with each other and said it was for personal reasons that they are backing out.

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They can terminate if they're willing to forfeit their hand money. Often in this scenario the earnest money is split between the seller and their broker, since the broker fulfilled their obligation to secure a signed sales contract.

This is why it makes sense to make sure that a buyer puts up a significant sum for the HM. I recommend 2-5% of the sale price.

Good Luck
0 votes Thank Flag Link Sun Jun 19, 2011
Yes they can. However, they will lose the handmoney in escrow.
0 votes Thank Flag Link Fri Jun 17, 2011
As a Buyer there are so many legitimate ways to get out of an Agreement Of Sale and have your earnest money deposit refunded but just backing out without cause as specified in the contract is not one of them. And at the point of the contract you were it is very difficult to have a legitimate reason. The forfeiture of the Buyer's deposit may be consolation if you receive it. As all the other responses have advised, consult a good real estate attorney. You can spend a lot of money and waste a lot of time and not get your property SOLD so don't dwell on the bad deal. Get out of it and move on.
0 votes Thank Flag Link Fri Jun 17, 2011
personal reasons are not enough reason to back out, on contracts for property sales there is only a few things that allow you out of the contract, one is the financing fell through, not been cancelled but that they did not get financing, the other is that they had right to inspect, even on AS Is as this would be, they could inspect the property so as to determine if they would buy it even with the items they wrong, they had at least 10 days in the beginning of the contract, they had a time period to speak up and didn't, you will keep the earnest money that may have been put in escrow, and you could go after them for the sales price!
0 votes Thank Flag Link Fri Jun 17, 2011
In general, with the standard PAR contract, this is considered buyer default. (Standard disclaimer to seek legal advice from an attorney, of course.)

If they checked line 545 on page 10 "seller is limited to sums paid by buyer... as liquidated damages," you can't do much more than keep their hand money. Hopefully it was a significant amount. That's a negotiating point, and one way to mitigate risk if you're worried about the buyer is ask for more hand money, or ask for the hand money to be increased after inspection. Looks like you had no warning here, though.

Hopefully, if you can't persuade them to just extend the closing (in writing, as an amendment to the agreement) and try to work things out, they will sign the REL form (release of hand money) with no trouble. There is also a TER (termination of agreement form), which should be signed by the buyers (the terminating party), to terminate the contract. You (and your agent) would fill out and sign the release form, directing that the escrowed hand money be released entirely to you, the seller, and send that to the buyers (through their agent) for signature.

Once both parties have signed, the buyer's broker turns that in to accounting and you'll get a check in a few days (assuming you're both represented and the hand money was escrowed by the buyer's broker, the typical case in Allegheny County).

As the seller, you're in a bit weaker position if for some reason they refuse to release the hand money. A new law says the deposit reverts to the buyer after a year if there is no agreement *and no pending legal action*. If they refuse for some reason, and you can't work it, out, you'll probably have to go to the magistrate to get it back.

If it's really fallen through, make sure your agent changes the status back to Active right away, so you don't lose any marketing time. Good luck!
0 votes Thank Flag Link Fri Jun 17, 2011
As everyone else stated definately talk to a lawyer.

I will say that what they signed is a contract. You should be (speak to a lawyer) entitled to the hand money if there was nothing wrong with their financing and and both parties reached an agreement during inspections.
0 votes Thank Flag Link Fri Jun 17, 2011
Hi Sherri,

I would agree with the agents who answered from out of state, that to determine legal recourse you will need to have your attorney review the details of the originally executed agreement of sale. In Pa, assuming you used the PAR form, there is a section that details default at lines 509-549.
0 votes Thank Flag Link Fri Jun 17, 2011
Thanks for your question Sherri. First, consult an attorney. Nobody can be forced to purchase a home even after contingencies are cleared but not without repercussions. Your agent can make a case that you are entitled to the hand money. You may have legal recourse too but depending on the size of the deal, it may cost you more $ than it is worth.

My philosophy is to close that chapter and look forward not back and move on. Everything happens for the right reason.

Good luck, hope this helps even a little.
0 votes Thank Flag Link Fri Jun 17, 2011
Much will depend on your contract; consider consulting with an attorney who specializes in real estate.
0 votes Thank Flag Link Fri Jun 17, 2011
You should check the contract to see if there are any legal ways out, but either way, you should talk to an attorney.

There are probably no contractual things that will let them out, but if they are not willing to buy, it can be hard to force them to sign.
0 votes Thank Flag Link Fri Jun 17, 2011
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