Can a Buyer Sue a Seller if They Refuse to Close?

Real estate contracts occasionally collapse due to Buyer problems, but what if the Seller bails out? Can a Buyer sue a Seller if they refuse to close? What used to be infrequent is becoming more common; Sellers backing out of contracts. They might have second thoughts about giving up a low rate or realize that maybe it’s better to keep the home they have. If that happens, what can a Buyer do?

If a Seller Refuses to Close a Real Estate Contract

In Georgia, Sellers play a less proactive role, most of the contract actions are initiated by the Buyers. If a Seller decides not to finalize the deal after all the conditions have been satisfied, the Georgia Association of Realtors contract (06/01/23) provides the following advice:

Remedies of Buyer: In the event this Agreement fails to close due to the default of Seller, Buyer may either seek the specific performance of this Agreement or terminate this Agreement upon notice to Seller and Holder, in which case all earnest money deposits and other payments Buyer has paid towards the purchase of the Property shall be returned to Buyer following the procedures set forth elsewhere herein.

There are two options; recover the earnest money and move on, or sue the Seller for specific performance; make them close per the contract terms. After the emotions and dust settle, what does a lawsuit look like? What are the damages – and most important – is it practical to pursue? If so, the contract adds:

Attorney’s Fees: In any litigation or arbitration arising out of this Agreement, including but not limited to breach of contract claims between Buyer and Seller and commission claims brought by a broker, the non-prevailing party shall be liable to the prevailing party for its reasonable attorney’s fees and expenses.

The party that doesn't prevail – the losing side – bears the responsibility for the legal costs. This provision probably exists to deter the Buyer from hastily resorting to litigation and clogging the system with lawsuits that might not be legally viable.

If a Seller Prematurely Terminates a Real Estate Contract

A bit different than just not closing, here the seller initiates termination of the contract. As in the video below, this might be due to any number of reasons, buyer financing is a likely reason. The seller, not wanting to wait for resolution, initiates termination. But if that’s done before allowing the buyer the proper contractual time to solve the issue, problems might arise for the seller. Seth Weissman explains:

Always Use Experienced Real Estate Agents

Another example of why it’s critical to fully understand every aspect of the real estate contract. Experienced agents are experienced for a reason, leverage that. Effective communication between agents is key, many issues can be avoided or quickly sorted when everyone works together.

REMEMBER:

• This is not legal advice, no one here is an attorney so don’t take this as such.
• Every situation is unique, what works for one might not work for another.
• The state contracts change regularly. This post references the 6/23 version, things might be different with future contracts.
• If the chit hits the fan – on either side – breathe and talk with your experienced agent. Communication is key, especially if things begin to get sideways.
• GOOGLE YOUR AGENT! DON’T USE HACK AGENTS.

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