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When can a seller back out of a real estate contract?

Searching for real estate can be frustrating and time consuming. Often, a potential buyer looks at dozens of offerings before finding one that will suit. When you finally found the perfect property, you may have felt a mixture of relief and excitement. Whether your pending purchase was for a business venture or your new home, you likely began making plans right away.

You probably paid to have an inspector check over the property, and perhaps you engaged contractors to make renovations or repairs. Maybe you sold your old house, bought new furnishings or rented a storage unit. It must have been a shock to you when the seller pulled out of the sale without warning.

Why did the seller back out?

Fortunately, most sellers have a reason for selling, so they are motivated to complete the transaction. However, you may have come across a seller who, for whatever reason, was not fully committed to giving up the property. There are limited circumstances under which a seller can abort the sale without legal implications, including:

  • You never signed a contract.
  • You signed a contract, but the seller terminated the transaction within the review period.
  • The contract included contingency clauses that allow the seller to walk away under certain circumstances, such as not finding a new home.
  • You have not met the terms of the contract, such as obtaining financing within the allotted time frame.
  • After seeing your inspector's report, you requested repairs or a price reduction that the seller was not willing to make.

You may have legal recourse if the seller terminated the transaction just because a better offer came in after you signed a contract. Additionally, if your contract did not stipulate that the seller could back out if he or she failed to find a suitable new home, you may wish to seek legal advice about your options.

What can I do next?

One of your alternatives may be to force the seller to follow through with the transaction by taking him or her to California civil court. However, this may take time and money, and if you are eager to make your own move, you may not want to invest more effort into this property.

A second option may be to attempt to recoup your losses, especially if you have already invested considerable money on what you thought was a done deal. An attorney with experience in contract disputes can offer sound advice on these alternatives.

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Chodos & Associates
1880 Century Park East
Suite 615
Los Angeles, CA 90067

Toll Free: 866-986-7255
Phone: 310-598-3405
Fax: 310-203-3866
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