What happens if the Seller no-shows at closing?

[Isaac Passmore]

I've only ever used traditional lending but I'm curious... What happens if the seller no longer wishes to sell the property and no-shows at closing? What happens to any short-term lending from hard money lenders or private financing that was put into escrow? Does it just sit there indefinitely until a lawsuit forces a settlement?

[Marcus E. Turner]

Great question (this is not legal advice)

If a seller no-shows at closing and decides to back out without a valid contractual reason, they’re typically in breach of contract. Here’s how it plays out:

• Escrowed Funds: Any funds wired by your lender (hard money or private) will not be released. The title company holds them in escrow, and they stay put until both parties authorize release or a legal judgment tells them what to do. So no, it doesn't sit there indefinitely, but it can get tied up for a bit.

• Recourse: You (as the buyer) have the right to pursue what's called specific performance—basically, you can take legal action to force the seller to perform (i.e., sell the property per the contract terms). That’s usually the route when it’s a clean deal and the buyer still wants the property.

• Time = Money: The bigger issue is that during this delay, you may incur costs—interest on your short-term lending, inspection fees, appraisal, etc. Some contracts will let you go after the seller for those damages, but that takes time and legal muscle.

• Word of Caution: Always make sure your lender’s funds don’t get wired too early—some wait until the seller signs first for this exact reason. It’s a small risk, but when it happens, it gets messy fast.

Escrow holds the funds tight, you're not losing the money (just access to it temporarily), and your best move is usually a combination of legal pressure and negotiation to get the deal back on track—or compensated.