what happens if a seller backs out of house sale prior to closing?

[grasswire]

Is there a big penalty? Is it possible to do that a week before the closing date? Please advise.

I am not the seller or the buyer, incidentally.

Neighbor 1 sold his house privately, without a realtor. Next door to that is a house rented out to a great family. Owner of the rental property just announced that she's selling her rental property out from under the great family, who now will be looking for a rental. Neighbor 1 sorely wishes he hadn't sold so he could rent to the great family.

Could he stop the sale? What would happen?

[Wcross]

1. I'm not sure but how about this idea?

Could the seller of the house purchase the rental that is being sold and rent to the family? It is an option to consider.

Try to post the question here;
http://forum.freeadvice.com/

It is a law forum and has a real estate law area.

[flvegan]

2. Depends on the contract.

There can be a penalty, yes.

Does "great family" have a lease agreement with the seller of the rental property?

[Jokerman]

3. Once a sales contract has been signed...

The buyer can sue to force the sale and possibly even get damages.

The previous owner of our house tried to back out. After a letter from our attorney, she decided to go ahead with the sale.

[Throwing Stones]

4. Could be very difficult

If the parties have signed a purchase and sale agreement, which is a fairly standard contract that parties sign usually 30 or so days prior to closing, then the seller could have a hard time backing out.

Generally, the buyer can sue the seller to force seller to close the deal - plus pay buyer's legal fees.

Would need more details, but best advice is that seller talk to an attorney BEFORE doing anything. Good luck.

[eyesroll]

5. I would, in my non-legal-advice-giving capacity, caution against stopping the sale.

If a SELLER backs out, the SELLER is in breach of contract. What happens depends on whether the buyer wants to sue, and to what extent. (Also, check the contract -- the parties could have put in a clause outlining what happens if the seller refuses. It's not standard, though, at least in WI.)

Because real estate is unique, a court could order specific performance -- that the seller go through with the sale, and the seller will also probably have to pay court costs, costs incurred by the buyer for the delay (rental, transportation, lost wages, etc.).

Now, if this was an ORAL contract, with no signed memoranda, the seller would have recourse under the Statute of Frauds. (Courts won't enforce oral contracts for real estate.)

Keep in mind, also, the monumentally bad karma of backing out of a sale with a week's notice. The buyer probably put notice in at his place, or sold his old house, and contracted with movers, maybe bought some furniture for the new place, arranged to get off work for closing and moving, invited his family over for Christmas...

[grasswire]

6. yeah, it's bad all the way around

Just thought I would check. The neighborhood is very sad about this and most of all they are afraid that that landlady will move back into her house while she tries to sell it. Apparently, she's very difficult to live near.