I agree with all of you. All the parties involved get a good Real Estate Attorney!
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 canâ€™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.