A seller invests a lot of his time, money and energy in preparing a property that has been sold. Sometimes, sellers are emotionally attached to their property, and may not want to sell it. At times, the buyers may want to cancel the contract of selling of property either due to lose of interest in the property or because of not having the sufficient funds to purchase it.

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Can a seller sue the buyer for backing out?

When a buyer withdraws from a property deal, it leads to the wastage of the time, energy, effort and money of the seller. A buyer may withdraw from a property deal due to monetary reasons or because of lose of interest in the deal.

Generally, sufficient time is given to the buyer to back out of a property deal. However, there exists a certain stage during the finalization of the deal after which if the buyer backs out, he would be liable to pay costs for the same.

In the process of purchasing real estate, if the buyer and the seller have reached the stage of signed documentation, i.e., signing of agreements and contracts, it is said to be binding by law. It is then the legal obligation of the parties to execute the selling process of the property. Cancellation of the contract may lead to the seller initiating a lawsuit against the buyer for breach of contract and legal violation. Often, the seller will be able to keep the deposit such as when an earnest amount is in the deal. The seller may also seek compensation from the buyer, in addition to keeping the deposit amount with him.

Can I back out of selling my home?

An agreement to sell is a contract that exists between the buyer and the seller for the selling of real estate property. If the seller defaults on the terms and conditions of the contract, he must return all deposits, plus additional reasonable expenses to the buyer. The other party may also seek to compel the erring party to complete the deal under specific performance.

For a buyer, it is advisable that the sale agreement should be registered at the earliest. A seller may back out of the selling process, but the buyer may compel the seller to honor the agreement under the agreed terms. They can also seek a court order asking for the contract to be honored.  However, the court has the sole discretion to order a real estate sale through specific performance.

What happens if a seller pulls out after the exchange of contracts?

The ‘exchange of contracts’ is an important step for getting the selling process of a property finalized. Until and unless there has been an exchange of contract between the buyer and the seller, the process of buying/selling the house is not legally binding. It provides the buyer or the seller with an opportunity to back out of the process of buying/selling the property.

When an “exchange of contracts” happens, both the buyer and the seller of the property sign on an official document to complete the purchase/selling process of the property. Once this official document has been signed by both the parties, it is said that both are legally invested in the process.

Once both the parties have signed and exchanged the contracts, it is very difficult for either of them to back out from the agreement. If the seller of the property pulls out after the exchange of contracts has occurred, the buyer will have to rescind the contract. The deposit has to be returned to the buyer with interest, and the seller has to pay for the charges involved in the cancellation of the registration of the contract.

What can a seller do if a buyer fails to complete the purchase?

A seller has to ensure that the buyer has sufficient means to complete a property deal. In order to achieve this, the seller must check if the buyer has a pre-approved loan, as this would give an indication about the financial capacity of the buyer. If the buyer is investing his own funds to purchase the property, the seller must inquire about the source of such funds.

  • If a buyer backs out of the agreement that exists between the parties or fails to complete the purchase, the seller will have to make quick changes to his selling strategy.
  • The seller can file a case in court, suing the buyer for breach of contract. He may also keep the deposit amount and may further seek compensation from the buyer.
  • Search the market for other potential buyers – it is a good idea to keep a list of the potential buyers who are interested in purchasing the property. If a buyer fails to complete the purchase, the seller can then re-negotiate a deal with the other buyers. The seller should however be able to answer the queries of the potential buyers with regard to the failure of the previous agreement of the selling process of the property.
  • Offer extra amenities over the property – if it is important for the seller to find a potential buyer at the earliest, the seller may offer the property at a discounted price. In addition to the reduced price of the property, the seller can also offer various amenities over the property, making it attractive for potential buyers. It would also help to increase the buyer base of the property for the seller.

Can a seller cancel a purchase contract?

Most of the times, a seller is highly motivated to sell their property. But as the agreement is entered into, he may not want to sell the property and may decide to cancel the purchase contract. Selling the property may also lead to a change in the lifestyle of the seller for which they might not be ready yet. A major fact is when the property is being sold for an amount that is less than the market price or the price asked for by the seller.

There are a lot of risks involved in the cancellation of a purchase agreement between a seller and the buyer. The buyer may sue the seller for canceling the contract and may ask for compensation for the damages that he has suffered due to the cancellation. The buyer may also sue for specific performance of the contract against the seller. In this situation, the court may order the seller to complete the selling process of the property and transfer the title to the buyer.

Also, sellers have very few opportunities to back out from a purchase agreement. Some instances wherein a seller can cancel a purchase agreement –

  • Verbal agreement –

In case of a verbal agreement between the buyer and the seller, the seller can cancel the purchase agreement.

  • Contract not being signed –

A contract that has not been signed by the parties cannot be enforced. Even if one of the parties takes the matter to the court, it cannot be enforced.

  • Buyer agrees to the cancellation of the contract –

If the seller is able to convince the buyer with regards to canceling the purchase agreement and the buyer agrees to the same then the seller can cancel the purchase contract without being sued.

How to minimize the risk of a property deal from falling apart?

A seller invests a lot of time, money, energy and effort in securing a deal for their property from a potential seller. In the event that a buyer back out from a property deal, it is not always possible for the seller to find another potential buyer at a short notice. While it is not possible to completely eliminate the risk of a buyer backing out from the deal, a property seller can take necessary precautions in order to minimize the risk of the deal from falling apart.

  • The seller must inquire if the buyer has a pre-approved loan amount from a bank. If a pre-approved loan amount is available, there is a better chance for the deal to be executed within the required timeline. The buyer would not have to run around to arrange funds for purchasing the property.
  • If the buyer is paying the amount through cash in hand to purchase the property, the seller must inquire about the source of the money.
  • The seller can insert a clause in the contract stating that the seller has the option of entertaining other buyers in order to prevent any last-minute or sudden cancellation of the deal. In an event that the deal is canceled, the seller has other potential buyers who are interested in the property.
  • Until the entire selling process is finished, the seller should have a backup plan ready. It is important to keep information regarding interested buyers who can be approached in case the deal is canceled.

What are the problems that a seller might face while selling real estate property?

At times, a property may be on the market but is not ready for it. This may be due to some key factors that may negatively affect the way in which the seller may sell the property. It may cause certain shifts in the real estate market, which result in the sellers facing problems while selling their property. Some of the problems that may be faced by a seller are –

  • Outdated property –

The property being sold is maybe outdated and old. It is observed that buyers are usually interested in real estate property that is new and modern as it gives them assurance regarding the quality of construction materials used in building the property.

  • Property requiring repairs –

Most buyers will avoid a property that requires repair work. A seller must conduct necessary repairs in order to show that the property is in a habitable state.

  • Location of the property –

The area where the property is located plays an important role in selling property. Buyers are always looking at areas that are close to their workspace, are safe and have easy access to other places such as malls, schools, restaurants, etc.


A lot of decision making and details have to be addressed before finding a perfect buyer. In order to ease the process of selling real estate property, the seller can hire a real estate agent or a broker, someone who will provide potential buyers with all the information regarding selling the property. They also handle the documentation work that needs to be done in order to ensure the completion of the deal.