If the seller of a home cannot close on the agreed-upon date, is this breach of contract and what recourse does the buyer have?

Failing to close on the agreed-upon date would be a breach of contract, assuming that the closing date was one of the contractual terms. Sometimes a breach of contract with closing a home justifies terminating the contract. Call the toll free number above to consult with an attorney about what recourse you have if a seller cannot close on the agreed-upon date or if you otherwise have a breach of contract when buying a home.

UPDATED: Jul 14, 2023Fact Checked

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Jeffrey Johnson

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 14, 2023

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UPDATED: Jul 14, 2023Fact Checked

Failing to close on the agreed-upon date would be a breach of contract (assuming that the closing date was one of the contractual terms). However, not all contractual breaches are created equal.

For any breach, the non-breaching party is generally entitled to compensation (“damages”) for any losses or costs it incurred as a result of the breach. However, only quantifiable monetary damages, or damages reducible to a monetary amount, can be compensated. For example, say that as a result of a late closing, home buyers who already sold their own home had to stay in a hotel for a week while storing their belongings. They could seek compensation for the hotel and storage charges, but won’t be compensated for the “disappointment” of not getting into their new home on time.

Other breaches may excuse certain breaches of the seller, or a court, if the matter had to go to court because the parties could not work it out themselves, might “reform” (or modify) the contract to reflect the fact that one breach (the seller’s failure to close on time) caused the buyer to have problems and need some additional time or accommodation. For example, say that the seller couldn’t close on time, so the buyer lost his mortgage. (Mortgage commitments are usually only good for a certain amount of time.) In that case, the buyer would not be in breach of the contract for not having financing, since the buyer’s breach was caused by seller’s. A court might order the contract to be extended, to give the buyer more time to obtain financing.

Sometimes a breach justifies terminating the contract, if the other party wanted to, as when sellers fail to close, don’t set any new or acceptable date for closing, and the buyer needs to terminate the contract and find a new place to live.

There is no single answer as to what happens if the seller can’t close on time. The buyer’s recourse will depend on the consequences of the failure to close, though since that failure would be a breach of contract, the buyer would be entitled to something.

Case Studies: Seller’s Failure to Close and Buyer’s Recourse

Case Study 1: Monetary Compensation for Additional Expenses

In this case, the seller fails to close on the agreed-upon date, causing the buyer to incur additional expenses. For example, the buyer may have to stay in a hotel or arrange for storage of belongings while waiting for the closing to take place. As a result of the seller’s breach of contract, the buyer can seek compensation for these quantifiable monetary damages.

The buyer may file a claim for reimbursement of the incurred expenses and losses caused by the seller’s failure to close on time.

Case Study 2: Reformation of the Contract

If the seller’s inability to close on time leads to significant consequences for the buyer, such as the loss of a mortgage commitment, the court may choose to reform or modify the contract. For instance, the court might extend the contract to provide the buyer with additional time to secure financing.

In this scenario, the buyer’s breach of not having financing would be excused since it was caused by the seller’s failure to close on time. The court’s intervention in reforming the contract aims to accommodate the buyer’s needs and address the impact of the seller’s breach.

Case Study 3: Termination of the Contract

In some cases, the seller’s failure to close on the agreed-upon date, coupled with their inability or unwillingness to set a new or acceptable closing date, may justify the termination of the contract.

If the buyer decides to terminate the contract due to the seller’s breach, they can pursue other housing options and seek legal remedies to recover any expenses or losses incurred during the failed transaction.

Termination of the contract allows the buyer to move on and find a new home without being bound by the previous agreement.

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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