Home Selling in Los Angeles>Question Details

Home Sick, Home Seller in Los Angeles, CA

Can sellers legally back out when a home is in escrow?

Asked by Home Sick, Los Angeles, CA Wed Aug 5, 2009

My home is in escrow. All of the paper work is signed. In the contract, the buyer stated that escrow is to close 40 days upon signing it. We were informed that it will end up taking two weeks longer. We (sellers) had a change of heart in selling the home due to financial reason and a job prospect fell through. We tried to conceal when the buyers did not complete inspection in the 14 day time frame. Our Realtor basically pulled a fast one stating that the contract was already signed and that we can not breach the deal; misrepresentation on her part. Can we get out legally if the home is not closed on the 40th day as mentioned in the contract? Your advice will be greatly appreciated.

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Hi Home Sick,

Sorry that I've been out for a while, so I didn't see you posted another question.

Well, if you are determined to cancel the sale of your house. You need to SPEAK with your real estate profession. Explain the reason to her and ask her for the best advice. Do not let the buyer's go through the motions of buying a house but knowing that they will not get the house at the end. That's really CRUEL. Put yourself in their position. If the buyers back out on you at the last minute the escrow is going to close, how would you feel about it? Just be honest and I think you can get out of your situation. Rebecca is right about we are not 100% clear of your situation because we are not involved in your transaction.

If you are hesitating to call a real estate attorney, maybe have your realtor to call CAR LEGAL first. It's free and they are usually very helpful!!
1 vote Thank Flag Link Sun Aug 16, 2009
I would recommend you get very clear about what you want to do. If you want to cancel the escrow and the Buyers have already violated the contract you can immediately serve them with a demand to close escrow (a form filled out and signed by you.) This tells them if they do not close in 3 days, you have the right to cancel the escrow without penalty.

If you do not follow property procedure and you do end up cancelling, you could open yourself to a lawsuit and a possible lean on your home, this could prevent you from ever selling it. or taking a loan out against it. This also could be much more expensive for you than just selling.

You have to remember in this forum, it is just advice from persons who are not involved in your deal and do not have the facts and details. Many of the agents giving you advice are new or from other states where there are different laws and regulations. You have already stated you do not have faith in your agent and we do not know if you have spoken with the Broker. One of the jobs of a great Realtor is to answer these questions and ultimately keep their clients OUT of trouble.

I am urging you to find and hire a Real Estate attorney immediately before a bad situation for you turns into a worse one.

If you need a referal, please ask..I'm sure you will be given many on this forum.
1 vote Thank Flag Link Mon Aug 10, 2009
Hello Home Sick and thanks for your post.

The plain and simple truth is that, even though you are in a contract to sell your home, there is no law in California that forces you to sell the home. In fact, especially in extenuating circumstances such as you will be facing, you certainly have reason to cancel the contract. Just as the seller cannot force the buyer to buy the home, the seller cannot be forced to sell the home. I was recently in a similar situation representing buyers with a recalcitrant seller who three times threatened to pull out of the sales contract, and we learned quickly from attorneys that not only could the seller do this, there was no way, as buyers in California, that we could prevent it.

Your situation, however, is a complicated one. If your agent is representing both the buyer and you (the seller), then she is anticipating quite a huge commission at the end of the sale, and is not likely to want to support you in cancelling the contract. As a result, you will have to talk frankly with her about your situation and let her know, as soon as possible, that you cannot sell this home and will no longer be able to do so given a change in circumstances. I think you should also immediately contact an attorney and speak with them about the best manner to cancel the contract. Let the attorney know about the lack of extension and the contingencies, but the key here is to move very quickly. the sooner the better to get everything cancelled with as much time to the buyers as possible.

I think you should also prepare yourself that you will have to pay for costs incurred by the buyer for the sale--you will not be able to cancel the contract without suffering consequences. These costs would include:

1. Reports and inspections
2. Appraisal
3. Interest on their funds held in title
4. Fees associated with notary or expenses incurred or charged by loan officers in cancelling the loan

Also, you will be charged for title company expenses incurred in the sale, and must be prepared to pay for those too. I suspect that, in total, the the title and report costs should not exceed $5000, but check with your Realtor and attorney to determine what these will be.

If you choose to cancel, do it quickly so that you do not cause the buyers to suffer any further harm in hoping that you'll sell the home.

Good luck and talk with an attorney tomorrow!

Grace Morioka, SRES, e-Pro
Area Pro Realty
1 vote Thank Flag Link Thu Aug 6, 2009
Since the Buyers have removed the contingencies, then you probably need to wait until day 37 when you can issue a Demand to Close Escrow form. If they do not close on day 40, you will have the right to direct escrow to cancel as long as no other agreements have been made in writing.

I would suggest you call your agent's Broker and ask to deal with him/her directly if you have lost faith in your agent to do as you ask. As someone else suggested, you can also consult a Real Estate attorney which is a great idea. A one hour consult shouldn't cost you more than a few hundred dollars and will likely save you a lot more in the long run, and at least give you peace of mind.

It is probably not the buyers who are dragging their feet, lenders are taking longer these days to process loans and if the buyers have provided the lender with all needed paperwork, they don't have the power to speed that process up.

Good luck, I hope it works out for everyone involved.
1 vote Thank Flag Link Wed Aug 5, 2009
Home Sick,

Sorry to hear about your dilemma. And I agree with Rebecca - your agent should be looking out for YOUR best interests. Unfortunately (or fortunately as the case may be), the buyer has many more options than the seller when it comes to canceling the contract and getting out o the deal. What is the reason for the buyers wanting to extend the escrow? Are they having problems getting their loan? If they are beyond their loan contingency time period and still have not removed the contingency, another idea would be to have your agent send the buyers a "Notice To Buyer To Perform" (C.A.R. form NBP), forcing them to remove the loan contingency within 24 hours, or you (the seller) has the right to cancel the agreement. This can be used for other contingencies besides the financing contingency as well, and at least it gives you some hope of getting out of it. Hope this helps, and good luck with your situation... Feel free to email me if you have any further questions.

Have a good night....

John Barry
Coldwell Banker Residential Brokerage
Sherman Oaks, CA
Cell: 323-810-7976
Email: john.barry@coldwellbanker.com
facebook: http://www.facebook.com/RealtorJB
Twitter: http://twitter.com/RealtorJB
1 vote Thank Flag Link Wed Aug 5, 2009
Dear HomeSick,

Without knowing all of the details and nuances of what has entailed in your contract, you should probably talk to a real estate attorney who can look through your paperwork and see what has been signed and what has been said between the parties.

In general, there are sometimes contingencies on both sides of the sale those contingencies are usually to be performed within a certain timeframe. If either party does not withdraw their contingencies before the said timeframe, the other party does have the right to exit the contract unless otherwise stated. (In California, that is usually 17 days). On a seperate issue, if the end of the contract expires, and the buyers cannot close by the stated date and time, you should be able to cancel the contract unless it was otherwise stated in the contract. If this is the case, you need to ask your agent to cancel the contract/escrow. There is a form that you will need to sign authorizing this cancellation and your agent should be able to explain it to you.

Again, if your agent continues to give you issues and will not answer your questions, I would recommend you go to the broker and see if you can get your questions about your contract answered. If not, get a real estate attorney's advice.

Hope this helps. Good luck to you!


Matt McClain
Axiom Real Estate / Axiom Lending Group
1 vote Thank Flag Link Wed Aug 5, 2009
Possibly. If the Buyers do not close on time, they can be served with a demand to close escrow 3 days prior to the COE date. If they do not then close escrow on time, the Seller can cancel escrow. This is if you have not already agreed in writing to extend the COE. Your agent is working for you and should have your best interest at heart. You may want to speak with the Broker.
1 vote Thank Flag Link Wed Aug 5, 2009
can a seller get out of a purchase and sale agreement if the seller has an incurable sickness and under a doctors care
0 votes Thank Flag Link Sun Mar 18, 2012
http://Awww... Home Sick,

I am sure everything will come through for you. As far as how you feel about your Realtor, talk to her and let her know your concerns. I am sure she will be willing to help.

0 votes Thank Flag Link Thu Aug 20, 2009
Thank you all for your advice. We are trying to be fair to the buyers and allow escrow to close even though, we are heat broken over the whole ordeal. We are past our closing date and the buyers as yet do not have loan docs. We hear everyday that they will be in. I personally hope that they never come in. I can not blame any one for our misfortune, but do feel that our Realtor as whole did not represent us knowing our dilemma.
0 votes Thank Flag Link Wed Aug 19, 2009
Where are you in this transaction? I'd like to know if I can help.
0 votes Thank Flag Link Tue Aug 18, 2009
As previously mentioned that we wanted to back out of selling our home due to financial reasons, can we give the buyers the opportunity to go through with the home with an additional time frame (example 48 hours) to be fair? Or, can we wait till past the date stated on the contract that the buyers placed to close escrow by and just cancel after that date since it was not met or does it have to be done prior to the date mentioned on the contract? Thank you for all of your advice.
0 votes Thank Flag Link Sun Aug 9, 2009
Hi Home Sick,

I am sorry to hear about your experience so far. You definitely can cancel the escrow but you will be responsible for the cost associated with the cancellation.

I think what you need to do is think about "What You Want." What was the reason for you to put your home for sale from the beginning? Does it worth to keep your house now? What will be the best for you for your situation.

I have heard about sellers backed out at the last minute (usually short sales) and buyers backed out at the last minute. But, think about what's BEST for you. I am not going to talk about the technicals because Grace, Rebecca, and Matt have already given you some VERY GOOD technical advices regarding to contingency periods and technical methods to get you out of the transaction. However, I believe you know by now that Real Estate Transactions are also very emotional and can be quite stressful sometime both emotionally and physically.

Think about what's BEST for you and TELL your agent what you WANT to do. Your agent works for YOU! I would do everything I could in my power to accomplish my clients' requests and I think she should, too.

BTW, if you really want to cancel the transaction, you should do it as early as possible. You don't want to give the buyers false hopes, either. My clients have been there and it's not a good feeling for anyone.

Good luck,

0 votes Thank Flag Link Fri Aug 7, 2009
The Realtor is representing us, the seller. She end up stating that we can back out if the house does not close as mentioned in the contract on that date. It is really a no win situation. I feel really bad for the buyers. We looked at houses that we could afford with the sale of our home and there were no comparison. It seems as though the market has picked up. The homes that sat on the market close to a year now have offers on them. Home Sick
0 votes Thank Flag Link Thu Aug 6, 2009
Thank you for all your response. Our Realtor was representing herself in negotiating the price down to the escrow process. As sellers, we were left in the dark. The buyers, we were told that they are "strong buyers". I am sure they will have no issues getting a loan. The buyers went beyond the 14 days written in the contract for their inspections by additional two weeks (we informed that we wanted to back out to our Realtor at that time). They did not sign off all their contingencies until 34 days after signing the contract which escrow is suppose to end on the 40th day according the contract and escrow papers. It seems as though the buyers have been dragging their feet through the whole process and did not process their loan on a timely matter to end on the 40th day. (the buyers made a big issue for everything to be closed on the 40th day and us out of the property). We did not sign any documents to allow this extra time for the buyers. Our Realtor was aware of the hardship we are soon to face but continued to represent the buyers as well as herself. Basically, I feel sick over the whole ordeal and feel bad for the buyers. Home Sick.
0 votes Thank Flag Link Wed Aug 5, 2009
Home Sick, I agree with what John said about the CONTINGENCIES this is great "Notice To Buyer To Perform".................... John your a smart man....
0 votes Thank Flag Link Wed Aug 5, 2009
Look at your contract under default. What does it say? Bottom line if your buyer doesn't close on the closing date set forth in the contract than they are in default. You must wait it out though and see if they do not close by the closing date. You do not have to extend the closing date. If you want to cancel prior to closing consult with your attorney.
Web Reference: http://www.ocalaflhome.com
0 votes Thank Flag Link Wed Aug 5, 2009
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