Does buyer have to provide proof to back out?

Question

So this is a first for us, did a forum search but no luck. State of Iowa.

The buyer wants to cancel the sale contract due to inspections and is demanding earnest money back. Do they need to provide proof in the form of an official inspection report? My (no -legal) opinion is how do I know his mom didnt just go in and say she didnt like it??

If its relevant: complaints are that a couple windows dont latch and electrical "worries"

The earnest money was garbage anyway but im still wondering

🤔🤔🤔

Lynnette E. · Answer

In the end you do not want a copy of his inspection report. THEN you must declare any junk things that are reported as faults with the property. if you are concerned, just check all the windows and check the breakers, outlets, etc.

Ray Evans · Answer

@Barb Asay It doesn’t sound like the contract states that they must provide a reason or possibly an amount.You do not want their report because then you must disclose to any future prospects.The contract I use for buying is absolutely vague so I can get off if I choose or can’t wholesale it.In the future if your using an agent let everyone know your still excepting back up offers and showings and keep it active instead of pending which turns some folks away.Its not sold until your at the closing table.On this one ,I would let it go.Sounds like not much of a loss and financing foils more sales than anything else.Relist with contract fell through.Best of luck

Mike McCarthy · Answer

@Barb Asay what does your contract say? Most that I’ve read allow the seller to resolve the issues. If there are electrical issues, you can agree to get an electrician in to resolve them. Now, forcing a buyer to stay in the contract likely isn’t a good plan, and I’m sure if they try hard enough, the buyer will find something you can’t fix. In the end, it’s probably easier to cut your losses and get the house back on the market. Move on!￼

Steve K. · Answer

@Barb Asay not sure about Iowa but here in CO the inspection clause in the state approved contract we use let’s the buyer back out based upon their subjective opinion of the overall condition of the property, they don’t even have to provide a specific reason or the inspection report. If the buyer wants out they have a lot more exit clauses on their end than you as the seller, and EM doesn’t go hard until after the deadline of all those clauses. A seller suing a buyer for specific performance is rare because it’s usually not worth it. The only thing you can really do about it as the seller is list the property as-is/don’t accept offers that have inspection clauses, which of course severely limits your pool of buyers and probably sends the message that the property is distressed or has issues. I would let this buyer go and just vet the next one better with some additional questions to their agent about how serious they are about the property/ their probability of closing before signing the contract with them. You could add an additional provision stating the property is being delivered as-is and that the inspection objection period is to be used only for major health or safety items that could not have been known prior to inspection.

Wayne Brooks · Answer

We don’t know Exactly what your contract says. Most inspection clauses are a “get out of jail free card”....no justification necessary to cancel.

Steve Morris · Answer

Again, READ AND UNDERSTAND THE PSA (not just your broker's interpretation).Depends on how it was written with regard to E/M being non-refundable. However, I'd ask nicely in case there is some real issues. Remember, the guy (buyer) that pays for the inspection report owns it and can do what they want or don't want with it.

Barb Asay · Answer

@Angie ShiresThank you. Good advice. I do have a realtor representing me. But she never mentioned back up offers as being an option, and I didnt know either so thats great info. It was a pretty crappy and all over the place offer so im not super surprised, actually. Its just uncommon in our area to flat out back out and not negotiate. Especially without offering valid proof of the complaint. My realtor thinks something else is going on, because the house is solid.Thanks.

Angie Shires · Answer

@Barb Asay Definitely sounds like there was more to it than the inspection report. Really, there is nothing more that you could've done to negotiate better...if there were no red flags with the buyer before them backing out. Did you have an agent representing you, or were you doing it on your own? A lot of times, we as seller's agents will get a pretty good feel for the validity of a contract (ie: is the buyer or buyer's agent being wishy washy or throwing warning signs). I always suggest making it known to all parties that we will be accepting back up offers. Make sure that the other buyers Realtors know this as well. Many buyers and sellers don't even know that's a possibility, if their agents don't tell them!

Rick Stein · Answer

As most of the respondents have said, it depends on your contract. Normally, if they want to back out for inspection issues, they should provide a copy of the inspection to show why. But, you can not force a buyer to go though with the sale. Sometimes, it is easirer to cut your losses and move on rather than wasting time and energy on something that will go nowhere.

Angie Shires · Answer

@Barb Asay Definitely sounds like it to me too, it's usually pretty easy to spot the transactions that won't go through or will be long and stressful! LOL