Can a seller cancel a real estate contract? (Tucson: loan, attorney)

[sunshinegirlAZ]

I am selling my house in Tucson and have accepted an offer from a buyer. I was wondering if Arizona law allows a seller to cancel a purchase contract after signing it. Is it only the buyer who can cancel if he doesn't like what he sees in the inspection? There's a line in the contract that says either party can "exercise his right of cancellation as allowed herein," but I didn't see anything that describes the reasons a seller can cancel.

Thanks in advance for the advice. I know I should be asking my agent this question, but since he is representing both the buyer and seller I don't feel comfortable asking him.

[frogandtoad]

Nope. Not unless a buyer violates a piece of the contract. So, for instance, if it says that the buyer must secure financing by a certain date, you could technically cancel if they didn't do it by that date (although most sellers would work with the buyers on that...). Or, if the buyers do an inspection and find a bunch of things wrong and ask you to fix some of them (totally reasonable and the way it usually works), you could flat out say no, you won't fix anything. That wouldn't allow YOU to cancel, but they might exercise their right to cancel if you were being unreasonable on that...

If it could be cancelled at will the contract wouldn't mean anything.

[Greatday]

Originally Posted by sunshinegirlAZ

I am selling my house in Tucson and have accepted an offer from a buyer. I was wondering if Arizona law allows a seller to cancel a purchase contract after signing it. Is it only the buyer who can cancel if he doesn't like what he sees in the inspection? There's a line in the contract that says either party can "exercise his right of cancellation as allowed herein," but I didn't see anything that describes the reasons a seller can cancel.

Thanks in advance for the advice. I know I should be asking my agent this question, but since he is representing both the buyer and seller I don't feel comfortable asking him.

Interesting question -

The seller cannot unilaterally cancel a contract under Arizona law.

A Seller can cancel a contract if the Buyer breaches the contract. AND, assuming you are using the Arizona Association of REALTORS Residential form contract, before either party can cancel (for the breach of the other party) they must first provide a "cure notice" giving the party in breach 3 days to "cure" (fix / remedy) the breach.

Now, let me give you a "what if". What if the contract provides for an appraisal and the value given by that appraisal is for less than the contract price. Does the seller have to adjust to the appraised value? No. Can the seller tell the buyer that the contract is for XXX dollars and if the buyer wants to proceed, that will have to be the price? Yes. If the buyer does not want to proceed, may the seller cancel at this point? Yes.

Generally speaking, unless there was a lack of good faith on the part of the buyer - for instance, failure to deposit an earnest money check, or failure to make a loan application etc., the seller cannot simple "cancel"

Hope this helps

[wit-nit]

All the above are valid responses. Simply put a contract is a contract that is legally binding unless there are agreed stipulations to it that cannot be met. Buyer or sellers remorse does not qualify.

[michael krotchie]

Everything above is correct and valid. Now do sellers cancel contracts in real life? You betcha.

If the seller decided to back out of the contract, the buyer could legally sue for "specific performance" and force the seller to sell the house per the contract. But most times the buyer doesn't want to deal with the time, effort, and cost that would take, and usually what happens is the earnest deposit (if any) is returned to the buyer and they move on with their home search after a few choice words for the seller.

If you have questions like this feel free to call your agent's broker, he should gladly answer any questions you may have.

[sierraAZ]

Originally Posted by michael krotchie

after a few choice words for the seller

LOL, can't rep ya right now, but I owe you one. Nice euphemism!

[mdtoaz]

Interesting thread... I assumed what everyone's saying, but it's good to know anyway (not that I plan on selling - or backing out of a contract - anytime soon).

[martin_9]

if seller cancels, is buyers agent still due their commission ?

[jdm2008]

Originally Posted by sunshinegirlAZ

I am selling my house in Tucson and have accepted an offer from a buyer. I was wondering if Arizona law allows a seller to cancel a purchase contract after signing it. Is it only the buyer who can cancel if he doesn't like what he sees in the inspection? There's a line in the contract that says either party can "exercise his right of cancellation as allowed herein," but I didn't see anything that describes the reasons a seller can cancel.

Thanks in advance for the advice. I know I should be asking my agent this question, but since he is representing both the buyer and seller I don't feel comfortable asking him.

Do you have to cancel? Obviously things to consider are too refuse to do any repairs give any extensions etc. If you don't trust your agent you also should consider speaking to an attorney(as financially it in his best interest to get a deal done and he may or may not be representing you).

[OnryOne]

In the case of most real estate deals, once you and the seller have signed a contract, neither party can back out without consequences. There are some contracts, however, that have clauses that allow a seller (or buyer) to cancel if certain conditions are not met.

Most conditions in a real estate contract are designed to protect the buyer. For example, you may make an offer conditional upon being approved for a mortgage, or pending a home inspection. If your financing falls through, or the inspector finds a termite infestation, these clauses allow you to get out of the deal without penalty.

Sellers may include similar “escape clauses” in the contract. In situations where a house is part of an estate sale, for example, the contract might state that the deal must be approved by other family members. If you accept this condition when you sign, the seller is able to back out if the condition isn’t met.

When a seller attempts to back out of a contract without such conditions, however, a buyer may be able to sue for financial damages. The buyer may even be able to get the court to order the seller to fulfill the terms of the contract. (The seller’s real estate agent, too, may be able to sue for his or her commission.) The specific consequences will depend upon the terms of the contract and the state you live in, but, in general, a seller is not entitled to renege because of a change of heart.