Buyer wants to back out of contract right before closing.

Upstate New York, New York
Buying & Selling Real Estate
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Buyer wants to back out of contract right before closing.

Sol Silverstein
Rental Property Investor · Albany/Troy, NY · Member since 2016 · 38 posts · 4 votes

Hi everyone. looking for advise, i am in contract to sell a multifamily property in upstate NY (Albany/Troy NY area). the buyer wants to back out right before closing after months of pushing up closing time.... he got already a clear to close from his lander but for whatever reason he decided he wants to back out of the contract. there is no contingency to the contract.  Any advise would ba appreciated

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y

They were probably trying to wholesale your property. Scummy all the way around. But as mentioned. Don't accept an offer without the EMD attached.

IF the contract had an amount listed as EMD and it was signed you might be able to go to small claims court for at least that amount. Explain to the judge how this realtor, an expert in the field, took advantage of you, the poor newb.

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  • Justin BrickmanBusiness Member
    Realtor · San Antonio, TX · Member since 2021 · 502 posts · 274 votes
    3y
    Quote from @Sol Silverstein:

    Hi everyone. looking for advise, i am in contract to sell a multifamily property in upstate NY (Albany/Troy NY area). the buyer wants to back out right before closing after months of pushing up closing time.... he got already a clear to close from his lander but for whatever reason he decided he wants to back out of the contract. there is no contingency to the contract.  Any advise would ba appreciated

     Is there earnest money down? You should be able to keep it without any issues. You can also sue for performance but that’s a tough road to go down. 

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  • Sol Silverstein
    OP
    Rental Property Investor · Albany/Troy, NY · Member since 2016 · 38 posts · 4 votes
    3y

    i forgot to mention the buyer is a licensed real estate agent

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  • Sol Silverstein
    OP
    Rental Property Investor · Albany/Troy, NY · Member since 2016 · 38 posts · 4 votes
    3y
    Quote from @Justin Brickman:
    Quote from @Sol Silverstein:

    Hi everyone. looking for advise, i am in contract to sell a multifamily property in upstate NY (Albany/Troy NY area). the buyer wants to back out right before closing after months of pushing up closing time.... he got already a clear to close from his lander but for whatever reason he decided he wants to back out of the contract. there is no contingency to the contract.  Any advise would ba appreciated

     Is there earnest money down? You should be able to keep it without any issues. You can also sue for performance but that’s a tough road to go down. 


    Buyer never sent the EMD (he promised so many times to send it but never did)....... & he is a licensed real estate agent too

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    You keep their earnest money and can go after them for specific performance. 

    2Reply
  • Paul Pratt
    Real Estate Agent · Member since 2023 · 92 posts · 80 votes
    3y

    @Sol Silverstein Yeah as previously mentioned, specific performance is a tough road. Unfortunate he wasted your time, but also in the future be wary of anyone who doesn't give you earnest money (agent or not) major red flag. I tell my buyers/sellers that a contract without it (EMD) is just a verbal offer. I would call the realtors broker though, and let them know the situation!

    7Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    They were probably trying to wholesale your property. Scummy all the way around. But as mentioned. Don't accept an offer without the EMD attached.

    IF the contract had an amount listed as EMD and it was signed you might be able to go to small claims court for at least that amount. Explain to the judge how this realtor, an expert in the field, took advantage of you, the poor newb.

    13Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    3y
    Quote from @Sol Silverstein:

    Hi everyone. looking for advise, i am in contract to sell a multifamily property in upstate NY (Albany/Troy NY area). the buyer wants to back out right before closing after months of pushing up closing time.... he got already a clear to close from his lander but for whatever reason he decided he wants to back out of the contract. there is no contingency to the contract.  Any advise would ba appreciated

    without “consideration” (earnest money) there never was an enforceable contract.  You won’t be able to successfully sue for specific performance.  File a complaint with the real estate commission.
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  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    3y

    Tough situation.  You should never sign a contract without EMD being paid at the same time.

    The three basic elements of a contract (and there are others) are 1. Offer, 2. Acceptance, 3. Consideration (something of value changes hands).

    There is a legal theory that says the contract itself is a thing of value and therefore counts as consideration. That means that a court could find that you have a binding contract, even without EMD.

    You can play hard ball and tell that agent that you're going to file a complaint with the state's Real Estate Commission and see if that gets you anywhere.

    If, as was said above, that agent was trying to wholesale your property (not sure how to prove that), he could be in violation of a tort known as "Fraud in the Inducement", meaning that he fraudulently caused you to enter into a contract that he had neither the intent nor the ability to complete.  That's another lawsuit.

    The problem is that you'll have to show damages and that's tricky.

    IANAL, so maybe you should talk with one.

    5Reply
  • Trevor Naumann
    Real Estate Agent · NY · Member since 2022 · 111 posts · 48 votes
    3y

    Definitely talk to your attorney about this. I have been on both sides of this as an agent and it is not fun at all, that is for sure. I would sue him for the down payment at the very least.

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    3y

    Without the earnest money, you didn't have a valid contract.  Move on and learn from this.  Always get a deposit and if they want to move the close date, increase the amount of the deposit.

    If he is a realtor and was working through his company, you can report him.

    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    3y

    Read the contract and figure out whether it includes limitations on remedies in the event of a buyer breach. Many contracts (especially those used by wholesalers) limit the seller's relief to a forfeiture of the deposit... and here a deposit was never collected. If that is the case I would agree with @Bill B. that the seller would need to sue for those funds. Business decision.

    It's funny to see specific performance suggested as a seller remedy. Absent some very unique circumstances no court is going to award this form of equitable relief because there is always an adequate remedy at law -- contract damages.

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  • Jay ThomasPro Member
    Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
    3y

    In Real Estate, earnest money down is an important aspect of the contract. If you have put down some earnest money, it should be relatively easy to keep this without any issues. However, if the deal falls through due to one of the parties not living up to their end of the agreement, then suing for performance may be an option but that can come with its own challenges and risks. Make sure to consult a real estate attorney before deciding on taking legal action.

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  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    3y

    @Sol Silverstein he was in breach of contract from the moment he did not submit the earnest money. Did you agree to use his title company ? Might be different in NY. Unfortunately I don't see how you can hold him to the contract but I would report him to NAR and your local New York licensing board. Was he trying to wholesale it ?

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Tom Gimer:

    Read the contract and figure out whether it includes limitations on remedies in the event of a buyer breach. Many contracts (especially those used by wholesalers) limit the seller's relief to a forfeiture of the deposit... and here a deposit was never collected. If that is the case I would agree with @Bill B. that the seller would need to sue for those funds. Business decision.

    It's funny to see specific performance suggested as a seller remedy. Absent some very unique circumstances no court is going to award this form of equitable relief because there is always an adequate remedy at law -- contract damages.


    common theme on BP from folks that have never been anywhere near litigation on real estate deals  LOL.. I would think if you want to sue for these kinds of things take your best shot at small claims court.  If it was a standard contract that is written by the local real estate board/MLS system many times those have mandatory mediation clauses in them.. I have used the mediation a few times and that works .. no one is happy but you dont blow a lot of dough on litigation.
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  • John Oliver
    Real Estate Agent · Binghamton NY · Member since 2021 · 7 posts · 3 votes
    3y

    It doesn't seem like there is much you can do in this situation. Without the EMD the contract was never valid which lets the buyer back out at any time. I'm not sure why someone would string you along like that but the best thing you can do is take it as a lesson and move on.

    1Reply
  • January Johnson
    Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
    3y
    Quote from @Don Konipol:
    Quote from @Sol Silverstein:

    Hi everyone. looking for advise, i am in contract to sell a multifamily property in upstate NY (Albany/Troy NY area). the buyer wants to back out right before closing after months of pushing up closing time.... he got already a clear to close from his lander but for whatever reason he decided he wants to back out of the contract. there is no contingency to the contract.  Any advise would ba appreciated

    without “consideration” (earnest money) there never was an enforceable contract.  You won’t be able to successfully sue for specific performance.  File a complaint with the real estate commission.

    Slow down before giving blanket advice across state lines.  Consideration ≠ Earnest money.  In Florida, for example:

    Florida Realtors Legal Hotline: Is earnest money required to make a contract legal and binding? The short answer: no. Deposits often provide evidence of a buyer's commitment to the purchase, but they're not required by law.

    3Reply
  • January Johnson
    Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
    3y
    Quote from @John Oliver:

    It doesn't seem like there is much you can do in this situation. Without the EMD the contract was never valid which lets the buyer back out at any time. I'm not sure why someone would string you along like that but the best thing you can do is take it as a lesson and move on.


    This is not true. You can have a valid contract (at least in Florida) without an EMD.

    But at this point, OP needs to move on and find another buyer.  This one has ghosted him.

    0Reply
  • John Oliver
    Real Estate Agent · Binghamton NY · Member since 2021 · 7 posts · 3 votes
    3y
    Quote from @January Johnson:
    Quote from @John Oliver:

    It doesn't seem like there is much you can do in this situation. Without the EMD the contract was never valid which lets the buyer back out at any time. I'm not sure why someone would string you along like that but the best thing you can do is take it as a lesson and move on.


    This is not true. You can have a valid contract (at least in Florida) without an EMD.

    But at this point, OP needs to move on and find another buyer.  This one has ghosted him.


    It is possible to have a contract without an EMD in New York too if the offer states that the EMD is zero. It isn't typical to not offer an EMD for this exact reason. If an offer is put in with a promise of earnest money and is accepted, the contract cannot be valid until the earnest money is paid.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @January Johnson:
    Quote from @Don Konipol:
    Quote from @Sol Silverstein:

    Hi everyone. looking for advise, i am in contract to sell a multifamily property in upstate NY (Albany/Troy NY area). the buyer wants to back out right before closing after months of pushing up closing time.... he got already a clear to close from his lander but for whatever reason he decided he wants to back out of the contract. there is no contingency to the contract.  Any advise would ba appreciated

    without “consideration” (earnest money) there never was an enforceable contract.  You won’t be able to successfully sue for specific performance.  File a complaint with the real estate commission.

    Slow down before giving blanket advice across state lines.  Consideration ≠ Earnest money.  In Florida, for example:

    Florida Realtors Legal Hotline: Is earnest money required to make a contract legal and binding? The short answer: no. Deposits often provide evidence of a buyer's commitment to the purchase, but they're not required by law.

    I think we are splitting hairs here..  if the contract called for EM and none was forth coming then you dont have a contract was Don's point. If the contract does not call for EM then thats fine you have a meeting of the minds.. Out our way in Oregon Washington ( not California) it was very common 10 to 30 years ago to Use EM  NOTES  as your deposit to be redeemed at a specified date.  

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  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @Sol Silverstein  1) try to ask them for the  reason .....might they want to  proceed with if you offer a  small  concession or drop price a  bit   2)  if there is earnest  money deposit  - let them know you will be  keeping this   3)  get property  relisted  asap 

    1Reply
  • Hersh ShahBusiness Member
    Realtor · Atlanta, GA · Member since 2016 · 127 posts · 82 votes
    3y

    @Sol Silverstein that is unfortunate.

    All states are different when it comes to real estate licensing law. I suggest reaching out to the broker in charge and letting them know what happened. He may be liable either way but if he didn't get it to you now, it's gonna be a tough path forward. Broker may be able to help through E&O insurance.

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  • Hersh ShahBusiness Member
    Realtor · Atlanta, GA · Member since 2016 · 127 posts · 82 votes
    3y

    @Sol Silverstein that is unfortunate.

    All states are different when it comes to real estate licensing law. I suggest reaching out to the broker in charge and letting them know what happened. He may be liable either way but if he didn't get it to you now, it's gonna be a tough path forward. Broker may be able to help through E&O insurance.

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  • Sol Silverstein
    OP
    Rental Property Investor · Albany/Troy, NY · Member since 2016 · 38 posts · 4 votes
    3y
    1Reply
  • Sol Silverstein
    OP
    Rental Property Investor · Albany/Troy, NY · Member since 2016 · 38 posts · 4 votes
    3y
    Quote from @Hersh Shah:

    @Sol Silverstein that is unfortunate.

    All states are different when it comes to real estate licensing law. I suggest reaching out to the broker in charge and letting them know what happened. He may be liable either way but if he didn't get it to you now, it's gonna be a tough path forward. Broker may be able to help through E&O insurance.

     Thank you @Hersh Shah i will reach out to them. 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    3y
    Quote from @Sol Silverstein:
    Quote from @Justin Brickman:
    Quote from @Sol Silverstein:

    Hi everyone. looking for advise, i am in contract to sell a multifamily property in upstate NY (Albany/Troy NY area). the buyer wants to back out right before closing after months of pushing up closing time.... he got already a clear to close from his lander but for whatever reason he decided he wants to back out of the contract. there is no contingency to the contract.  Any advise would ba appreciated

     Is there earnest money down? You should be able to keep it without any issues. You can also sue for performance but that’s a tough road to go down. 


    Buyer never sent the EMD (he promised so many times to send it but never did)....... & he is a licensed real estate agent too


    Tell him to close, or youll be filing an ethics and commission complaint against him. Non deposit of the EMD is a serious offense for a licensee. He would at the very least have his license suspended if not revoked.

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