My assumption is that the owner seller funds some money or hit the jackpot in the Lottery and wants to keep the property.
There is no Law, that says Seller or Buyer can’t cancel any escrow, but they do have to face the consequences if that ends up in court.
Since you had Short-Sale, and buyers loan approval and all contingencies where removed, just before closing, is that what happen?
The seller could be liable for Escrow Charges, Selling and Buyer Agent, Commissions and miscellanies Expenses.
Once again, this is not legal advice. To get that you need it from an Attorney.
You said that the Seller canceled escrow. By "seller", do you mean the lender/bank or the owner of the property? In a short sale the lender who holds the note or has given the mortgage is not the seller. The seller still is the owner on Title. You get approval from the lender of the Seller because the lender has to accept getting a lower amount back instead of the full outstanding mortgage. The lender does not give disclosures to a buyer. Only the owner of the property does that who has personal knowledge.
As has been mentioned by others in this forum, get legal advice for the situation you are in.
United America Realty
First, this is not legal advice. For legal advice talk with an attorney.
Second, I realize that you are frustrated. Without knowing all the details, seeing the paperwork, etc. I am not sure that this is the best place for you to get the advice that you need.
Third, the professional that is handling the purchase for you should be the primary provider of advice. That is their role.
So, in a brief summary:
Sometimes lenders involved in short sales have buyers sign an adendum. Did you? If so, what does it say? In many cases the forms stipulates what might happen and what your recourse might be.
Also, did you read the CAR Shortsale advisory?
One of the big problems in purchasing a short sale is exactly what you encountered here...invest time, money and effort, then get zero.
It should be noted that (disclaimer - generally speaking) if a seller back at after contingencies have been removed, and they change their mind, the buyer can sue for "specific performance". The seller needs to sell, or pay the buyer damages. Just because the sale is a "short sale" subject to lender approval, the seller still is the owner, meaning that they are liable to follow the purchase agreement.
I suggest that you talk with your Realtor, if they are not helpful, talk with their broker. If they are not helpful, talk with an attorney.
Sorry for your situation. Good luck.
1) Did you use the standard CAR Residential purchase contract?
2) Did a Realtor represent you?
An Escrow is an impartial 3rd party that must have terms from and by seller/buyer that match for the close of the escrow.
Personally, barring an equitable solution from using your purchase contract's clauses that cover this situation, your loss is within local Small Claims court jurisdiction ($7,500). Whether this is a simple breach of contract case or fraud (if intent can be proven) that allows for triple damages is unknown. I would also seek a free consultation with a RE lawyer.