Can a Buyer Sue a Seller for Backing Out of a Home Sale?


You’ve saved, skimped, searched, and finally found a home to buy. You’ve even signed a purchase contract. But what happens if the seller decides to back out of the sale? If you’ve found yourself in this situation, or you’re just mentally preparing for a worst-case scenario, it’s fair to ask: Can a buyer sue a seller for backing out of a home sale?

This guide will walk you through the essentials of home purchase agreements, your options for recourse if a seller reneges on a deal, and how to proceed with a lawsuit if necessary. We’ll share expert tips and insights from a real estate attorney so you know your options and what to expect.

Achieve Greater Buyer Confidence With a Top Agent

HomeLight can connect you with the most experienced buyer’s agents in your home shopping area. These top professionals can help you make the best buying decisions and protect your interests.

What is a home purchase agreement?

A home purchase agreement, also known as a real estate contract, is a legally binding document between a buyer and a seller. It outlines the terms and conditions of a property sale, including the purchase price, closing date, and any contingencies that must be met before the sale can be finalized. This contract ensures both parties understand their obligations and provides a clear path to transferring ownership of the property.

Here are key components typically found in a home purchase agreement:

  • Identification of parties: It lists the buyer(s) and seller(s) involved in the transaction.
  • Description of the property: This includes the address and sometimes a legal description.
  • Sale price and terms: The agreed-upon price and terms of payment.
  • Contingencies: Conditions that must be met for the sale to proceed, such as financing approval and satisfactory home inspections.
  • Closing details: Date and location of the closing, and who pays for what expenses.

Can a buyer sue a seller for backing out of a home sale?

“Yes,” says Stephen Donaldson, a leading real estate attorney with The Donaldson Law Firm in New York. “If the seller has defaulted pursuant to the terms of the contract, a buyer can sue a seller for backing out.” However, he adds, “You always want to avoid litigation.”

He explains the specifics of when legal action is appropriate depend on the terms outlined in the purchase agreement and the laws of the state where the property is located.

“What constitutes as the default is identified and spelled out in the contract,” Donaldson says. “It usually falls under the heading of ‘If the seller refuses to satisfy contractual obligation.’ That will give the buyer a right to bring action against the seller.”

Donaldson cautions that the home purchase contract must clearly be on your side.

“Why a buyer would bring an action against the seller is generally only if the seller refuses to close,” he says. “It’s about specific performance. The buyer is saying, ‘You signed the contract that said you were going to sell me this house. Now, you’re telling me you’re not. No, you’re defaulting against the contract. I’m going to bring the action against you to make sure you sell me that house. And if you don’t want to do that, then pay me back the money I’ve lost from losing this transaction.”

More From Life Style