Home Buying in Boston>Question Details

Terry French, Home Buyer in Boston, MA

Can a seller back out of a deal with a signed offer letter and money in escrow?

Asked by Terry French, Boston, MA Fri Aug 23, 2013

We submitted a P&S agreement on time with one amendment attached. The sellers backed out citing the fact that they didn't like or agree with the wording. We were not given a chance to remove the addition. They simply told us they were going with a back up offer. I have a real estate lawyer who seems to think it would not be worth pursuing. Is this really legal in mass?

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21
Unfortunately your Attorney may very well be right. This just might not be worth pursuing. Here in NY, unless there is a signed contract by both parties, there is no legal deal and that means the seller can back out at anytime up until he or she signs. I have a feeling that its works in a similar fashion in MA.
2 votes Thank Flag Link Thu Sep 12, 2013
no in ma we write binding offers to purchase subject to a purchase and sales agreement. My sister in-law is a top agent in New York and they take verbal offers and pass them off to the attorneys and until the p&s from the attorney is signed anyone can step into a transaction. If this is wrong please let me know.
Flag Thu Sep 12, 2013
Terry,

Again your legal counsel should be directing you as to how to enforce the forms you signed. He should also be aware of what to do to enforce them.

Not to defend the listing broker - but he is a representative of the seller and it is his obligation to do as requested (within the law) . It is not he who did not sign the p&s it was the seller, who has no obligation to but you do have recourse if he does not. Whether that recourse is practical is another question.

I would of had my attorney send them a lis pendens but you would of had to present them a Standard Form p&s (no changes (which is not without its own risks)) with the full deposit in the timeframe that were spelled out in the offer form or what the two attorneys had agreed upon.

Louis
0 votes Thank Flag Link Thu Sep 5, 2013
Follow up for anyone who cares:

We talked with several different lawyers and they seem divided on the matter. My agents intend to pursue action with the real estate board under the logic of the listing broker not acting in good faith which was certainly the case. The listing broker actually admitted to us that he never had any intention of signing the P&S from day one. he also cited several things as an excuse that were not even included in it. That is documented. I have no comprehension of why he thought it necessary to tell us that.

They returned my deposit but did not send a release form. It has now been two weeks and no release form. I was under the assumption that they could not move forward with another offer until they had that.

Regardless of the legality, my personally belief is that the listing broker acted immorally at best and there needs to be some legal ramifications for that. Perhaps it will save someone else this grief in the future.
0 votes Thank Flag Link Thu Sep 5, 2013
Interesting. Sounds like the sellers were motivated by the back up offer. I agree with Thaddeus that if you do not trust your current attorney's advice you should consider calling another attorney and seeking their council (especially for a 2nd opinion). Perhaps your attorney is simply warning that the time and money it would cost to pursue these sellers isn't worth it which could very well be fair advice. What does your buyer broker say about the situation? Has he/she gotten a better answer from the listing broker?

Good luck!

Territory Real Estate
Massachusetts Destination for Home Buyer's
617 848 5407 ext 704
Web Reference: http://territory.com
0 votes Thank Flag Link Mon Aug 26, 2013
Best of luck. Keep us posted.
0 votes Thank Flag Link Sun Aug 25, 2013
Thanks everyone for your input. It is much appreciated.
0 votes Thank Flag Link Sun Aug 25, 2013
The P & S still needs to be in agreement with all parties for things to move forward, so if your P & S addendum asked for a new roof or something that the seller didn't think reasonable, then they probably wouldn't sign the P & S.
Whatever it may be over may still prove difficult and costly to get lawyers involved.

Also, if you do not trust your real estate lawyer for these legal matters, then it certainly won't hurt to look around or ask for a recommendation or two.

Best of Luck,

Tk
0 votes Thank Flag Link Sun Aug 25, 2013
Terry,

Thank you for the info, most mortgage contingencies allow you an out. If you are asking for something specific that is not ordinary it may raise red flags that question your ability to perform.

Has your deposit been returned? If not you and you still have not signed a release you may still have a chance. Again, I would of recommended that you submitted the revised p&s with the deposit check when required, as the seller does have legal requirements to negotiate a p&s in good faith. Was this done by you and your attorney, once you were aware that the clause was not acceptable?

Listing agent has nothing to do with the legal aspect it should be the sellers attorney.

I am not your agent nor your attorney, but either should be able to guide you based on the specifics of your situation.
0 votes Thank Flag Link Sun Aug 25, 2013
Louis,
I'm not sure I should use specifics in case those involved frequent the forum. I can say that it was a request that would give me the option of backing out if the bank required something extra that was not typically required (it was one very specific thing). If that helps. It did not involve any concessions from the seller. I can also say that the listing agent was given well over 24 hours to respond to this request a day before the P&S was due. He did not respond. When we submitted the P&S agreement to them they declined it based on this request. The argument being made by my side is that they purposefully did not respond in order to back out and accept a higher offer.

They did not send a release form that I am aware of as you mentioned earlier.
0 votes Thank Flag Link Sat Aug 24, 2013
Terry,

You do have rights and under the terms of the offer time to work out a p&s, your attorney is negotiating and if a term is not acceptable it can be removed for them to ignore it is not working under the terms of the legally binding contract they have signed. (but you do have representation who is more familiar with the specifics of this transaction)

The second addition you mention what was the request if you don't mind sharing?
0 votes Thank Flag Link Sat Aug 24, 2013
Consulting with your atty. would be your best bet. You could contact other atty. and see what their response would be.

best of luck
0 votes Thank Flag Link Sat Aug 24, 2013
Terry,

I am a real estate attorney and broker. It will depend on a number of things, including the wording in your offer letter. Also, even if they were not allowed to back out, you would most likely only be entitled to whatever costs incurred as a result of their breach of contract. It is much harder to force them to sell you the house. Feel free to contact me and I would be glad to help you with this issue, or to help you find another place.

All the best,

Michael P. Welsh, Esq.
michael@mcdermottwelshrealty.com
0 votes Thank Flag Link Sat Aug 24, 2013
Follow the advice your attorney has given you as they are the expert when it comes to a legal interpretation of a situation like this one.
0 votes Thank Flag Link Sat Aug 24, 2013
Thanks everyone for your answers.

The listing agent was extremely difficult to work with. Sometimes he took days to respond. I have no doubt they received a higher offer.
One addition we wanted to make was discussed before hand. They wouldn't accept it so it was removed. The second addition to the P&S was asked the day before the due date and we never got a response from him. All the parties on my side were convinced this was ignored deliberately in order to cancel the deal.

If I knew then what I know now I would have removed it.
0 votes Thank Flag Link Sat Aug 24, 2013
All the answers below are great answers. I would also suggest that you should consult an attorney. Or you can move ahead with search for another property.
Suing in such situations can be costly and results not clear, as some brokers already pointed out here.
Kind regards,
0 votes Thank Flag Link Sat Aug 24, 2013
So, as black and white as we try to make laws ... there is obviously quite a bit that is subject to interpretation. That is why we have lawyers and judges.

Were the terms of the amendment discussed in advance or did you spring it on them on the day the P&S was slated to be signed? How clear or what contingencies were in the original signed offer?

I'm not a lawyer and can not advise on the legality of it all, but I do know some practices that we've been drilled on to keep our clients out of court as much as possible. So, I am just trying to figure out what has triggered the seller to do this. The expectation is that there has been ongoing discussions from the time the offer was accepted to the time the P&S is signed and anything deviating from the specifics on the offer gets clarified at that time.

While it may be true that the seller is looking for an excuse to back out for a better (higher or more expedient) offer, if you have a trail of communication leading up to the final P&S, you could have a stronger case of the seller reneging.

The fact of the matter is ... in Massachusetts, a signed offer is an agreement only for the terms as stated on the offer (which may have several contingencies) and is only as good until a final P&S is signed at the specified date and time and should contain as little to no contingencies as possible unless other AGREED UPON amendments are made along the way. The signed P&S is what is most binding, that is why it's advantageous for both sides to get to a straightforward fully executed P&S as quickly a possible.
0 votes Thank Flag Link Sat Aug 24, 2013
You should consult with an attorney regarding the legality of the situation. There are too many unknowns. Get a second opinion from another attorney if you're still not convinced. Agents and Brokers are advised not to give legal advice. With that said, it doesn't sound like it's worth the hassle. You made a change to the agreement (one amendment attached)? A seller can refuse a deal if the terms change, even a little, as I'm sure you know. As far not being able to remove the addition/amendment, in essence, yes, the seller can still decide to back out. Why? Who knows, seller/s prerogative. Maybe there's a better offer, maybe not? Point is, an amendment was added and the seller/s didn't like right? Had you gone with the original terms, and they backed out, I think you'd have a case. Again, I would consult with an attorney to make sure. Best of luck!
0 votes Thank Flag Link Sat Aug 24, 2013
You have a signed offer and they would need your release to move forward with a back up offer . Inform them you will not be providing this.

What my client did in a very similar situation was to meet the terms that the seller requested (they actually had a higher offer by 20k and wanted out) and presented the signed p&s with the proper check to the seller and sellers attorney within the time frame that was spelled out in the offer for performance.

However your attorney should be directing you properly. And he should be able to work it out.
0 votes Thank Flag Link Sat Aug 24, 2013
Suing for specific performance can be costly, time consuming and the results unp[predictable at best.

There are so many unknowns in your questions that I don't know how anyone online can tell you much more than to sit down and have a real estate attorney review the signed contract and advise you. You can certainly make it difficult for the Sellers to sell the house by tying them up but before you do ask yourself, if it's going to be productive and if you want to purchase a home under these conditions assuming you could get the sellers to capitulate.
0 votes Thank Flag Link Sat Aug 24, 2013
He is talking about specific performance and yes it is a legal mess and costly. It can take years and unless this is your dream home and you are getting it for a steal it would not be worth it.

Can the seller back out? depends on the offer wording of your p&s ( a mutually acceptable p&s or the standard form p&s)

I would have your attorney remove the clause and resubmit it. Also you can sue them (ask your attorney) it would tie the property up and they could not sell it to another person,

Sometime sellers get another HIGHER offer and try to get out of the deal. Do you know if that is the reason or if they just dont want to move.
0 votes Thank Flag Link Sat Aug 24, 2013
I would listen to your Attorney!! You changed the terms of the agreement. The seller (s) have every right now to accept your new term . If I am Reading this right.
Good Luck
Ron Berquist
0 votes Thank Flag Link Sat Aug 24, 2013
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