This is one of the reasons I'm happy to be with my large company. We have a legal department and the
Des Moines Area Association & Iowa Association all have Legal departments to protect our clients and us from defaulting on contracts. Part of the long tedious parts of the contracts is dealing with these unusual
instances. One of the newer parts of Iowa Law is the buyers agency, which creates the legal relationship or fiducuary duties of an agent to a buyer. Previously a buyers agent would become, in effect an agent of the
seller who would be the only party with a legal relationship.
If buyers go through the listing agent a dual agency can be created creating a fiduciary relationship to both
parties.

If you had a written contract and were working with a Realtor, it depends what you signed and what the buyer signed throughout the contract. I would suggest you contact an attorney as there are many, many facets to this question.

In a general sense, if all the contingencies (financing, inspections, etc.) had been released prior to the buyer backing out and you did not sign a release of purchase agreement so that you could put the home back on the market and refund their earnest money, the answer is yes, there is legal recourse. Iowa law allows a seller to pursue damages from a buyer when a buyer backs out after the contingencies have been released but prior to closing. The amount of the damages is typically the difference between what the home was sold to this buyer for (potentially plus lost marketing time, legal fees, etc.) and what the home sells to the next buyer for.

So, you really have to wait to see what your damages after the home sells to another buyer. In Iowa, the first question a judge tends to ask in real estate transactions gone awry is, "How were you harmed?" by the party you are are suing. If you house would sell for $10,000 less than you sold it to this buyer for, you may have some legal recourse. If it sells for $2,000 less, it is pretty much going to be seen as little harm/little foul.

Talk to your agent (assuming you have one) about what you can do. If your agent doesn't know (this is not a common thing so you can't expect that every agent will know) you can ask to speak to his or her broker. The broker in the office can give you an overview of options, but a real estate agent or broker cannot practice law or give you legal advice, they can only review what you have signed and the buyer has signed, so you would need to contact an attorney if you decided to proceed with recouping damages.

You don't mention whether you have a written contract or are working with a Realtor. If a written contract was in play I would expect your Seller has defaulted and you would absolutely have legal recourse. If you have a Realtor working on your behalf I'm sure they can guide you through the process.

Beth Lancaster
beth.lancaster@sothebysrealty.com