What happens if a buyer refuses to close on a property?
Question Details: The due diligence period has ended and our buyer now informs us that they do not want to close on the house. They have been vague as to their exact reasons why. What can we do, the closing was set for next week?
When parties enter into a purchase and sales agreement, that constitutes a binding contract. As a general rule it specifies the parties, the purchase price, states the closing date and lists other relevant facts about the transaction. Like other legal contracts, if one of the parties refuses to complete the transaction according to its terms, the other party may seek damages for breach of contract. Specifically, if the buyer is the one unwilling to go through with the transaction, monetary damages is the remedy that can be granted to the seller. Courts are reluctant to require "specific performance" from the buyer and force them to buy the property. They will be required to pay for all actual losses. Further, if the fair market value is worth less than the accepted offer, the buyer may have to pay the difference between the offered price and the fair market value.
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