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Hello, My husband and I decided we want to cancel escrow.

Hello, My husband and I decided...
Hello,
My husband and I decided we want to cancel escrow. We are the sellers. There are 7 days left to escrow closing. I know we have the right to cancel as much as the buyer does. But our Realtor is telling us that we have breached the contract. Is this true? Are we liable if the buyers want to sue?
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Answered in 14 minutes by:
6/18/2013
LawTalk
LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 37,855
Experience: I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
Verified

Good afternoon Angelica,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.

Under CA law, once both parties sign a contract of sale, and any and all "contingencies" have been removed, then for either party to back out of the sale agreement would constitute a Breach of Contract, and the injured party could sue.

A contingency is generally a clause that allows one party---usually the buyer---to terminate the agreement if for example, the home does not pass inspection, or the lender will not agree to fund the mortgage loan. It is very rare for sellers to have a contingency---though not unheard of. The seller's contingency is usually related to a purchace of a home that the seller has entered into with a third party, and the seller reserving the right to cancel the sale of their home to the buyer if the other home deal falls through.

However, most buyers will not agree to such terms when they make an offer on a property.

If you breach the contract of sale, the buyer can sue you and seek a court order forcing you to sell the property to them. Now in reality, the buyers rarely sue the sellers who breach, because of the cost of litigation and the time involved. They usually just move on.

However, what does happen with fair regularity is that the Realtors involved with your sale can sue you for their lost commission---which is typically about 6% of the sale price of the home.

So, there is a chance that you might sued for the breach, and you need to consider that when making your decision to back away from a contract of sale. I'm sorry.

I wish you the best in 2013.

I understand that you may be disappointed by the Answer you received, as it was not particularly favorable to your situation. Had I been able to provide an Answer which might have given you a successful legal outcome, it would have been my pleasure to do so.

You may reply back to me using the Reply to Expert link if you have additional questions.

Kindly take a moment to rate my service to you based on the understanding of the law I provided. Please understand that I have no control over the how the law impacts your particular situation.

Thank you,

Doug

LawTalk
LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 37,855
Experience: I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
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Thank you for your positive rating of my service, Angelica. It has been my pleasure to assist you and I hope than you will ask for me on JustAnswer should a future need ever arise.

Please feel free to bookmark the following link so you can request me to answer any future legal questions you may have:
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Thanks again.

Doug

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