What happens if the buyer backs out before closing? What will it cost?

UPDATED: Sep 30, 2022

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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