Making the decision to sell your home is a big step, but once you find the right buyer, you expect the process to go smoothly. Though this is what happens in most cases, there may be instances when sellers want to back out of their real estate contract. Unfortunately, backing out isn’t always as simple as you might think, and your Minnesota real estate attorney wants you to understand when backing out is an option and what happens if you back out without cause.
Real Estate Contracts Are Legally Binding
It’s important to note that real estate contracts are legally binding for both buyers and sellers. Both buyers and sellers are expected to adhere to the terms outlined in the contract. Failure to do so means you’ll risk a potential lawsuit with the other party.
Ultimately, this means sellers cannot typically back out of a contract without a clear and justifiable reason. But it also means buyers can’t back out without a justifiable reason, protecting your interest as a seller.
When Sellers May Back Out of a Contract
There are a few situations when sellers may back out of their real estate contract and terminate the sale with the buyer. Here are some common reasons why sellers may choose to back out of the agreement.
There’s a Failure to Meet Contingency Clauses
Contingency clauses are common in most real estate transactions, and there are several contingencies that sellers can use to back out of agreements if those contingencies are not met. This includes the following scenarios.
- Appraisal contingency: If the home appraises for less than the asking price, the buyer has the right to walk away. But if the buyer chooses to make an amended offer at a lower price, the seller can also legally walk away from the sale.
- Inspection contingency: If the buyer’s home inspection uncovered issues with the property, they can legally request that the seller make repairs. If the seller finds that those demands are unreasonable or place undue burden on their finances, they may be able to walk away from the sale.
Be sure to review the contingencies included in your contract with your Minnesota real estate attorney.
The Buyer Breaches the Contract
If the buyer fails to live up to the terms they agreed to in the purchase contract, the seller can legally back out of the sale and start the process over again with a new buyer. Why? Because contracts are legally binding documents and agreements that both parties are expected to fulfill. If one party fails to live up to the terms of the contract, the other can legally walk away without repercussion.
When a Seller Can’t Back Out
If the buyer doesn’t breach the contract and all contingencies are met and agreed to, the seller cannot back out of the contract without facing repercussions. If you fail to close on the sale when everything is legally valid, the buyer may sue.
Every situation is unique, but buyers may be able to sue you to recover the costs they incurred during the purchase process including:
- Home inspection fees
- Home appraisal fees
- Travel expenses if they’re located out of state
Your Minnesota real estate attorney will help you understand your options and can help you understand what may happen if you back out of the sale without cause.
Speak With a Minnesota Real Estate Attorney
If you’re worried about the sale of your home and want to make sure that you understand your rights, speak with a Minnesota real estate attorney as soon as possible. At Waypoint Law, our team is here to help. Contact us today to schedule a free consultation.