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Can I Get Sued for Backing Out of Buying a House?


The seller is eagerly waiting to close the deal. In fact, you have signed all the financial, and legal paperwork and all that remains is the transfer of funds to the escrow. But, for one reason or the other, you decide not to buy the house.Consequently, you back out of the contract. The seller is devastated and threatens to take legal action against you following your last minute change of mind. That said, are there statutory provisions that allow the seller to sue for backing out of buying a house?

To put it plainly, you can get sued if you back out of the purchase of a house. A real estate purchase contract is legally binding, and once the involved parties sign it, they are expected to abide by its terms.

Wait, Why Would You Want To Back Out of Buying a House?

The decision to purchase a house is most often premeditated but so is backing out. Before pulling out, you must determine if you have enough grounds to do so. You can legally back out of purchasing a house due to contingencies including:

  • Loss of income
  • Inability to qualify for a mortgage
  • Failing to sell your previous home
  • The seller’s failure to repair or renovate the house as agreed
  • Disputes over the house’s title
  • Misappropriation of facts in the contract

Note, the seller can only take legal action against you for pulling out of a house purchasing contract, if you fail to invoke your right under a contingency.

What Damages Will the Seller Be Seeking to Recover?

If you fail to invoke your contingency rights, the seller may sue you in a bid to force the transaction to go on or pursue damages. In the suit, the seller may recoup the expenses incurred in obtaining a new buyer. These costs can include the broker’s commission and advertising bills. Additionally, as the seller looks for a new buyer, he or she may seek to recover maintenance costs, taxes, insurance premiums, utility bills and other reasonably foreseeable expenses.

When you back out of buying a house, the seller may have the right to retain earnest money. This is the money you pay during the initial offer to purchase the property. Earnest money is deposited into a trust account and applied to the buying price after closing.

What If The Seller Backs Out, Can You Sue?

In most cases, the seller’s aim is to make sure that you buy the house. As such, his or her options are limited. The buyer controls most real estate purchase contracts. However, if the seller fails to act so as to facilitate the deal promptly, you can take legal action in a bid to recover damages for the time wasted. In such a situation, you also have the right to pull out without having to face legal consequences.

What if You’re Still Interested in Buying the House, but the Seller has Backed Out?

If you still want to purchase the house, you can sue the seller to make the court impose sanctions on him or her. You may as well file an arbitration request and obtain a Specific Performance ruling. Doing so will make the court or arbitrator compel the seller to complete the deal. While your case is underway, you can file a lis pendens against the house’s title to let any other prospective buyer know that the house’s title can forcibly change at any time. In essence, seeking a specific performance ruling renders the house unsellable.

Note, in the United States, a lis pendens is a written notice that there's a court case regarding a particular property. The suit involves either the title to the property or a claimed ownership interest in it. You will file a lis pendens in the county land records office.

Why Is It Important to Check Your Contract Before Signing?

A real estate purchase contract states your responsibilities and those of the seller. It also designates contingencies, time frames and what to do if either party fails to meet the terms. Be sure to check the contract before signing so that you can understand your obligations clearly. Whenever possible, seek the guidance of an attorney before putting pen to paper.

Buying a House is A Complicated Affair, You Need an Attorney

There is more to the purchase of a house than just signing the contract and making payments. It gets complicated if you back out. If you or a seller has pulled out of buying property, consult a real estate attorney in your area immediately. The lawyer will offer free advice and options that will best protect you under the law.