What happens if the buyer backs out before closing? What will it cost?
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What happens if the buyer backs out before closing? What will it cost?
We have a family medical situation that may prevent
us from moving to Florida and unable to purchase
home there. We have complied with everything in the
contract as well as the seller. We close in 2 days.
Asked on July 26, 2017 under Real Estate Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
1) The seller can certainly keep any deposit or earnest money as damages or compensation--that, in fact, is the purpose of the deposit: to simultaneously encourage the buyer to not back out, since doing so loses the deposit, while also ensuring the seller gets at least some compensation if the buyer does.
2) If the contract limits the seller's "damages" to the deposit, that's all he can get. But if the contract doesn't so limit the damages, he *may* be able to sue you for more. In the absence of a contractual limitation, the seller may recover all his provable losses which reasonably foreseeable came from the buyer's refusal to close, such as--
a) any legal, inspection, etc. costs he incurred;
b) the "carrying costs" (like utilities, insurance, mortgage, property taxes, etc.) for having to own and maintain the home for some number of additional months until finds a new buyer and does actually sell it.
If the seller's total costs exceed the amount of the deposit, the seller could (again, if there were not contractul limitation) sue you for the amount by which his losses or costs exceed the deposit.
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