Maybe things are very different in Virginia..... here in CO I have never heard of a seller's lender entertaining a short sale when the seller is current with the mortgage.
And since a short sale can only happen with the seller's lender approval I can't imagine that the contract of which you speak was viable.
Check with a real estate attorney.

Many questions remain. Did the seller sign the contract? No agents are involved? (seller's agent or buyer's agent?) What about deadlines? Was it mentioned in the contract that the contract is contingent upon lenders approval of a short sale? The best would be to talk to a real estate attorney with your documents in hand as this could be a legal issue and we are not attorneys and can not and will not give advice or practice law without a license.
In general in a short sale the lender will decide the final price that they are willing to accept, the contract is contingent upon the lender's (third party) acceptance/approval.

Mrs T,

Based on limited info, Here is the answer?

1. If you have an actual signed contract agreement (buyers & sellers signature).
2. Some of the contract contingency dates have not been met or completed by you
3. If there is an inspection clause in the contract, and the requested inspection request could not be agreed upon. Then yes the seller can break the contract, and say they don't want to sell.

However,

If the Seller is truly doing a short sale, the Short sale must also have the approval of the bank(s) to accept a sales price lower than what is owed. If the seller did submit the offer to the bank, and the bank said no. Then the seller can say the offer was too low and they don't want to sell.

However (2nd However)

How was the contract written? Did it have phrasing that said contract offer is contingent upon bank approval? If it didn't, and all other conditions are met according to the contract terms, Then the seller might have to still sell to you, and bring the difference of the loan balance and final total closing cost to close the transaction. In that case, you may have to speak with a real estate attorney to see what recourse you have if it is a legit contract. Keep in mind if seller is doing short sale, they may not have money to do anything.

So these are the different scenarios, that is possible. Again not having full details, unable to give you specific answer for your situation. Please note, especially in short sales, every offer is uniquely different, and has to be handled on it's own.

If you have any other questions feel free to ask

Regards

Bill

That depends on many things. The governing factor is the agreement that was executed. Is there a clause for a seller 'out'? What does your agent say? In Colorado the sellers are obligated to close on a contract that they've signed. When you add 'short sale' to the mix it gets tricky. If the contract was subject to the seller's lender accepting a short sale and they don't ask for a short sale or they don't cooperate with the short sale therefore have it rejected then they may be able to get out. Consult your agent then an attorney if the house is worth it. Best of luck.
-Alan Strange