

Q: My wife and I have a contract to buy a home. All contingencies have been met. But, since late last year, my wife has had many operations leaving unhealed wounds and other health issues. The house has a pool but the doctor has told her never to use it. We want to break the contract with the seller due to my wife’s medical condition. Do we have a right to cancel due to that complication?

A: The answer to your question lies in how the language of your contract to purchase is written.

When you sign a contract to buy a home, you are signing a legal document that obligates you to do something and obligates the seller to perform as well. In your case, you are obligated to buy and the seller is obligated to sell.

Now, if the seller refuses to sell, you can sue the seller to force the sale or for the damages you might incur as a result of the seller’s failure to sell you the home. Likewise, if you fail to buy, the seller can sue you for the damages the seller might sustain but can’t sue to force you to buy the home. Since real estate is considered unique and special, the legal thinking is that a buyer might not be able to find another home exactly like the one under contract and is therefore entitled to try to force the seller to sell. But, a seller can always find a buyer for the home. If the seller sustains damages as a result of a buyer’s failure to buy the home, the seller can sue the buyer for damages.

Now, in many contracts, buyers and sellers agree to a liquidated damage clause. This provision allows the parties to agree in advance on the remedy the seller might have if the buyer walks away from the deal. If your contract has a clause that states that the seller gets to keep the earnest money or good faith deposit as seller’s sole remedy, you might have to forfeit that amount for walking away from the deal.

The forfeited amount is supposed to compensate the seller for any harm that the buyer does by walking away. Typically, the “harm” is expressed as the cost of keeping the property and selling it for perhaps less than you would have paid.

You might want to talk to the seller about your wife’s unfortunate medical circumstances and try to work something out. If the market is hot in your area, the seller may have other buyers waiting to buy the home. In this situation, the seller may not lose money as a result of the cancellation of your contract and might even do better by selling it to someone else if prices have gone up in the interim.

The problem is that in some parts of the country, real estate sales are weak. If you live in an area where real estate is not moving or prices have come down, you may find that the seller isn’t thrilled about you trying to cancel the deal, especially if the seller has already purchased another home.

However, the seller might be willing to take some money from you to cover his expenses and inconvenience. In some situations, sellers recognize that a buyer that has gone through death or health problems may be willing to work something out with the buyer or even let the buyer out of the deal. The seller may not have the obligation to do that but is willing to do that to be considerate.

Unfortunately, it’s likely that your contract may bind you to the deal. If that’s the case, then it will be up to the sellers to decide how they want to proceed with you when you tell them you want out. You would likely benefit from the help of a real estate attorney in tackling this negotiation, especially if you put a lot of money into escrow.

One last item that concerns us. You mentioned that your wife has had these issues for the last eight or so months. This timing raises certain questions for us that we’re sure the seller will ask: Did you know of these issues when you signed the contract? If you did, you might have put something in the contract giving you the right to walk if your wife’s health issues got worse. Or, from a different perspective, if you knew she had these issues, why did you sign the contract for the home?

If you knew of these issues and you’ve kept the seller in the dark until the 11th hour, we can foresee the seller being quite angry when you ask to be let out of the deal after the seller waited months to see you come to the closing table.

Have a conversation with your attorney about strategy and try to figure out a way to work out the situation amicably with your seller. The last thing you need now is more stress. We hope your wife recovers quickly.

Related Reading

Penalties For Backing Out Of Contract

Cancel House Contract Before Closing