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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

  1. 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.

  2. 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.

  3. 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.