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Can a seller cancel a contract?

Dallas, TX |

If the seller decides that they don't want to sell their home 24 hours after they signed a contract to sell, and the buyer has only sent the earnest money to the title company. The buyer was supposed to give the earnest money immediately after the contract was signed, but took 48 hours to send to the title company. The seller has not received any funds directly.

Attorney Answers 3

Posted

The contract may allow but I encourage you to read it at length with an attorney in your area.

NOTE: The use of the Internet for communications with the firm or this attorney will not establish an attorney-client relationship and messages containing confidential or time-sensitive information should not be sent.

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Asker

Posted

My thought is: the buyer at this point is out nothing, they have only written checks which have not been cashed. I have told the realtor I am not selling. I believe that they can only sue for damages at this point which amount to nothing.

Posted

The language of the contract is critical. Under certain conditions, the seller can terminate the contract, but you must read it. If the seller merely tried to revoke the contract without cause, you may have what we call a right to specific enforcement, the right to force transfer of the house, but in that case the contract should be recorded to put other prospective buyers on notice of it. If the seller terminated the contract pursuant to the terms of the contract, you would normally be entitled to return of your earnest money. In any event, you should consult an attorney familiar with real estate transactions.

DISCLAIMER: This is not specific legal advice and does not establish an attorney-client relationship.

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Posted

First, read and re-read the sales contract, and any documents that may be incorporated by reference. A binding contract is formed when a seller and buyer agree to terms. The indication of agreement comes in the form of signatures on the contract. The contract may then require that the parties undertake or perform various obligations. Unless the contract states, for example, that the contract will not be binding or enforceable unless and until as a condition precedent the buyer deposits the earnest money with the title company, then such obligation is simply a task to be performed as part of the contract.

For example, in Castroville Airport, Inc. v. City of Castroville, 974 S.W.2d 207, 210 (Tex.App. -- San Antonio 1998), the court observed that a condition precedent may be either a condition to the initial formation of a contract or to an obligation to perform under an existing agreement.

So, unless the deposit was a condition precedent to the initial formation of the contract, the deposit would simply be an obligation required of the buyer. As an ordinary contract term, the timing for performance is generally within a reasonable time (unless the contract specifies that time is of the essence and sets a drop dead deadline.) But, the terms of the contract have to be construed to determine the parties' intentions. It may be that the seller can exercise default remedies set out in the contract, but again, it depends on the contract terms and your particular facts.

My general impression is that the contract is binding, the seller has sustained no damage from a slight delay in earnest money deposit, and the seller cannot use the slight delay to terminate the contract. But, the contract terms and the particular facts can change the legal interpretation.

Good luck.

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8 comments

Asker

Posted

The buyer originally made an offer, but when they tried to negotiate the closing costs the seller walked away. The buyer then came back a month later saying they sold their home and would pay the asking price and closing costs. The seller determined there were no damages at this point and called the realtor and said they changed their mind and weren't selling. The buyer is now back saying they sold their house as a result of this contract to buy the house. That was the one thing that could be grounds to sue- but it is a different story than what the seller said.

Brian W. Erikson

Brian W. Erikson

Posted

From what you write, there apparently was no contract signed by both buyer and seller for a specific price and terms. Until the seller signs a contract, the buyer cannot force the seller to sell. A property could be listed for a price and a buyer could offer to pay that price. That does not mean that the seller then has to sell. Until the seller signs a contract of sale, the seller has not committed to sell the property. Keep in mind that when it comes to real estate, agreements have to be in writing to be enforceable. It is possible that the buyer may have some sort of claim, but it appears not to be strong. A court reviewing the matter could very well feel that the buyer should have met the seller's terms from the beginning and that with the passage of time, the seller had to right to change the seller's mind. It could be that the reasons for selling changed or that some property that the seller wanted to buy was no longer available. Unless there were strong communications between the buyer and seller during the interim that would have prompted the buyer to rely on the communications to the buyer's detriment, the buyer is probably out of luck. Good luck.

Asker

Posted

Here's exactly what happened: this home has been owned for 30 years- paid for in cash. Two elderly, but healthy/active people live there. The house was never on the market. The buyer just wanted a corner lot, so they approached the home owners and made them an offer- after being turned down once the buyer came a second time saying they would pay the original offer plus closing costs because their house sold. The home owners did sign the contract to sell- but decided they didn't want to sell. At that point two days had passed, the home owners called the realtor and said they didn't want to sell. The realtor brought a termination of sale contract which was signed. Now the buyers have come back saying that they sold their house as a result of buying this house- which was not what they originally said. Now the home owners are trying to make a decision.

Asker

Posted

Here's exactly what happened: this home has been owned for 30 years- paid for in cash. Two elderly, but healthy/active people live there. The house was never on the market. The buyer just wanted a corner lot, so they approached the home owners and made them an offer- after being turned down once the buyer came a second time saying they would pay the original offer plus closing costs because their house sold. The home owners did sign the contract to sell- but decided they didn't want to sell. At that point two days had passed, the home owners called the realtor and said they didn't want to sell. The realtor brought a termination of sale contract which was signed. Now the buyers have come back saying that they sold their house as a result of buying this house- which was not what they originally said. Now the home owners are trying to make a decision.

Asker

Posted

Here's exactly what happened: this home has been owned for 30 years- paid for in cash. Two elderly, but healthy/active people live there. The house was never on the market. The buyer just wanted a corner lot, so they approached the home owners and made them an offer- after being turned down once the buyer came a second time saying they would pay the original offer plus closing costs because their house sold. The home owners did sign the contract to sell- but decided they didn't want to sell. At that point two days had passed, the home owners called the realtor and said they didn't want to sell. The realtor brought a termination of sale contract which was signed. Now the buyers have come back saying that they sold their house as a result of buying this house- which was not what they originally said. Now the home owners are trying to make a decision.

Asker

Posted

Here's exactly what happened: this home has been owned for 30 years- paid for in cash. Two elderly, but healthy/active people live there. The house was never on the market. The buyer just wanted a corner lot, so they approached the home owners and made them an offer- after being turned down once the buyer came a second time saying they would pay the original offer plus closing costs because their house sold. The home owners did sign the contract to sell- but decided they didn't want to sell. At that point two days had passed, the home owners called the realtor and said they didn't want to sell. The realtor brought a termination of sale contract which was signed. Now the buyers have come back saying that they sold their house as a result of buying this house- which was not what they originally said. Now the home owners are trying to make a decision.

Asker

Posted

Here's exactly what happened: this home has been owned for 30 years- paid for in cash. Two elderly, but healthy/active people live there. The house was never on the market. The buyer just wanted a corner lot, so they approached the home owners and made them an offer- after being turned down once the buyer came a second time saying they would pay the original offer plus closing costs because their house sold. The home owners did sign the contract to sell- but decided they didn't want to sell. At that point two days had passed, the home owners called the realtor and said they didn't want to sell. The realtor brought a termination of sale contract which was signed. Now the buyers have come back saying that they sold their house as a result of buying this house- which was not what they originally said. Now the home owners are trying to make a decision.

Brian W. Erikson

Brian W. Erikson

Posted

If the seller signed a contract of sale, and does not have a legitimate reason for rescinding the sale, the buyer needs to review the default options set out in the contract. Typically, one of the default options is specific performance -- requiring that the seller sell the property. There is no three day rescission rule for real estate transactions. You can review the Attorney General's information on the 3 day rule at the following web address: https://www.oag.state.tx.us/agency/weeklyag/weekly_columns_view.php?id=183 Since you are in the Dallas area, you may wish to take advantage of my free hour of consultation for new clients. If you make an appointment, please bring copies of your pertinent paperwork. Good luck.

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