The buyer typically has three default outs on a typical AAR contract which the seller has no recourse:
Inspection period typically 10 days, but really can be up to 20 days if you include the BINSR (10 days to get the BINSR to the seller, 5 days for seller to respond, 5 days for buyer to accept the response, or cancel the contract).
Appraisal. If the appraisal comes in lower than the offer price, the buyer can choose to re-negotiate or cancel the contract.
Loan contingency. If the buyer cannot get the loan fulfilled than the contract is cancelled. This can kill a deal the day before CoE with no recourse for the seller.
So with taking that in to account. If the buyer is not using any of these or other contract contingencies to cancel the contract, the seller can keep the earnest deposit. As others have stated there is a possibility of suing for additional performance damages. With the current market, there is really no need to go to this extreme since homes are selling in days. I understand there are many situations where the seller of the home is buying a new home, and cancelling the contract would lead to complications in their purchase deal. In that scenario the loan fulfillment is typically placed upon the ability to sell their current property.
Having deals cancelled is always a sticky situation and there is never two deals that are exactly alike so YMMV.
I will also add the disclosure that I would recommend they speak with an attorney regarding their rights and this message should not be considered legal advice.
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1) You can keep the buyer's earnest money deposit for liquidated damages
2) You can sue the buyer for specific performance
The buyer also has contingencies build into the purchase agreement; therefore, you should read over the purchase agreement and determine if the buyer still has a right to cancel within guidelines of the agreement.
I hope this answers your questions but if not, then please feel free to call me at the number below. If this transaction does not work out, then I would be happy to assist you selling your home.
Sean Heideman, Broker
Since this is a hypothetical question and we do not how far in the process in this assumption the contract has gone, a valid answer is not available here. The buyer has more exit clauses in a typical contract, example financing and inspection period.
Depending on circumstances, Seller can:
1. Keep the Earnest Deposit
2. Ask Attorney to review for damages, if any, since home was taken off the market
Reviewing with an attorney is the smart thing to do since each purchase contract is unique.
Jeffrey Masich, Realtor, GRI, MBA
Arizona homes and land for purchase or sale
Have you received the Seller's Property Disclosure Statement? With the AAR Contract the Buyer has 5 days to back out of the contract if they find items they disapprove of on the SPDS.
The seller cannot back out of the AAR Contract. Again it depends on the way the contract is written. I suggest you speak with your Realtor.
Good luck. Tiffany