Can a buyer back out of a PA last minute in this case?

[Dominick Marschall]

Hello, 

I'm selling a duplex I have. I have a signed purchase agreement from the buyer. We are supposed to close on April 1. They bought with no inspection. The appraisal came back exactly at the home selling price with no repairs needed. 

Yesterday, they came to my realtor and said they want to cancel and have their earnest money refunded. They sent over their cancellation later, I have not signed it. They were buying my home by doing a 1031 exchange. They put their other rental on the market after signing my purchase agreement, but later found out they have a large repair bill on their rental in order to get it sold. Hence the reason they are trying to back out my buying my house. I knew this may come up as an issue so we made sure to include the verbiage in the PA "In the event **their rental address** does not sell and close by 4.1.2022. Buyers agree they can still perform on the closing of **my home address** on 4.1.2022 using traditional lending." 

So in essence, they still have to buy my house even if they do not sell their rental and do a 1031 exchange. My realtor is reaching out to their broker to get some document (I forgot the name) in order to make sure that financially they would still be approved for a mortgage and cannot back out based on not having financing fall through. 

In my eyes, this deal is closed and they cannot back out, but I was hoping to hear if anyone has had a similar situation and how that may have played out. I'm located in Minnesota. 

Or what is the most probable outcome of this?

What should my next steps be to prepare ? Should I contact a lawyer or at what point should I get a lawyer involved?

FYI the buyer is a real estate agent. 

Thank you, 

[Tim Swierczek]

Quote from @Dominick Marschall:

Hello, 

I'm selling a duplex I have. I have a signed purchase agreement from the buyer. We are supposed to close on April 1. They bought with no inspection. The appraisal came back exactly at the home selling price with no repairs needed. 

Yesterday, they came to my realtor and said they want to cancel and have their earnest money refunded. They sent over their cancellation later, I have not signed it. They were buying my home by doing a 1031 exchange. They put their other rental on the market after signing my purchase agreement, but later found out they have a large repair bill on their rental in order to get it sold. Hence the reason they are trying to back out my buying my house. I knew this may come up as an issue so we made sure to include the verbiage in the PA "In the event **their rental address** does not sell and close by 4.1.2022. Buyers agree they can still perform on the closing of **my home address** on 4.1.2022 using traditional lending." 

So in essence, they still have to buy my house even if they do not sell their rental and do a 1031 exchange. My realtor is reaching out to their broker to get some document (I forgot the name) in order to make sure that financially they would still be approved for a mortgage and cannot back out based on not having financing fall through. 

In my eyes, this deal is closed and they cannot back out, but I was hoping to hear if anyone has had a similar situation and how that may have played out. I'm located in Minnesota. 

Or what is the most probable outcome of this?

What should my next steps be to prepare ? Should I contact a lawyer or at what point should I get a lawyer involved?

FYI the buyer is a real estate agent. 

Thank you, 

@Dominick Marschall it sounds like you have a very good case to keep the EM, you may also have a case to sue for specific performance, but the details will matter, and only someone who can read the contract and knows the law can answer for sure.  Realtors are trained in this subject but when it comes down to an actual law suite an attorney should be consulted.  I'd recommend @Brad Schaeppi.  My advice would be to schedule a meeting with Brad to cover the facts, and do not sign a cancellation before that meeting.