There are numerous common reasons that real estate closings fall apart at the last minute. Typically, buyers have an obligation to follow through with their offers and purchase real property unless certain circumstances justify canceling a closing.
Even then, there may be a dispute about their decision, and the seller may demand to keep their earnest money. Earnest money deposits typically represent 1% or more of the offered sale price. Litigation may be necessary to resolve that disagreement.
Real estate contracts outline cancellation options
Buyers making offers on residential real estate typically include contingencies in their offers. These contingencies allow them to cancel the closing without penalty if something unexpected happens between when they submit the offer and when they close on the property.
Contingencies related to financing, appraisals, inspections and even the sale of the buyer’s home are common. Although buyers may feel confident about their right to cancel, sellers might disagree that the circumstances warrant the invocation of the contingency. They may file a claim against the earnest money.
Going to civil court to litigate the matter may be necessary in such cases. Buyers must present evidence supporting their claim that the situation falls under the scope of the contingencies included in the agreement. Sellers may try to validate the losses they sustain due to the cancellation and justify their retention of the buyer’s earnest money.
People preparing for real estate transactions or dealing with the aftermath of a failed purchase may need support. Partnering with a real estate litigation lawyer can help aspiring homeowners and sellers protect their interests when transactions go sideways.