Can a seller back out of an offer in Canada?
Can a seller back out of an offer in Canada? The short answer is sometimes. There are cases in which a seller can change their mind after accepting an offer and others where it may not be an option. If you’re about to sell your home, you’re probably more focused on finding a great offer than figuring out what to do if you suddenly decide that the one you’ve accepted isn’t right. But it’s important to know your options in case things don’t go as planned.
Why would a seller want to back out of an offer?
Life is full of surprises, and things like job changes, illness or family issues can change your plans unexpectedly.
- Unexpected life changes: If you’re thrown a curveball while selling your home, you might be second-guessing the offer you just accepted.
- Personal or emotional factors: Selling a family home is an emotional and personal decision, some sellers have a change of heart when they realize they’ve just made the decision to let go.
- A higher bidder: You might get a higher offer or one with better contingencies right after you decided to go with the one that was in front of you.
- A difficult buyer: If the person you’re selling to suddenly becomes difficult or you realize they’re planning to bulldoze the home you grew up in, you might get cold feet and want to change the decision you made.
- Trouble finding a new home: If your home sold faster than you anticipated, you might suddenly find yourself without a new place to move into.
When can a seller back out of a home sale?
A seller can back out of an offer before closing if no contract has been signed. If a verbal agreement was made, the seller can back out of the agreement if it wasn’t signed by both parties. Changing your mind on a verbal agreement doesn’t have legal consequences in the same way that a signed agreement does. A home purchase requires an Agreement of Purchase and Sale signed by both parties.
Contingencies can give you options
Sale agreements can include contingencies that protect the buyer or seller’s needs. For example, a home-sale contingency can make the sale confirmation dependent on whether you’re able to purchase a new home to move into. If you’re backing out because you haven’t found a new place and the contingency is clear in the contract, then you have the option of ending the deal or just extending the time frame so you have more time to sort out your new accommodations.
Legal issues
If another issue made the sale illegal or unethical, you could be allowed to break the agreement in court. In rare cases, buyers might have scammed an independent seller into selling their home far below market value. If legalities are questionable you might be able to end the agreement. Seek the advice of legal counsel to see what your options are.
How can I get out of a home sale that I agreed to legally?
If you’ve already signed an Agreement of Purchase and Sale, you might not be able to get out of the agreement unless legally “released” by the buyer. In this case, you can appeal to the buyer to explain your reasoning and come to an agreement. You can also use contingencies that they included in the contract; by not agreeing to a contingency, you might be ending the contract in a legal way.
What happens if I back out of a home sale illegally?
If you don’t come to a mutual agreement or have legal contingencies that excuse you, you could face legal and financial consequences for not honouring the contract. When you signed the agreement to sell your home it was a legally binding contract. If you refuse to sell, the buyer could sue you for breach of contract. The real estate agent who listed your home could also penalize you because they won’t be getting the commission they were owed. If you’re in a tough situation where you could face these circumstances, make sure you’re kind and transparent with your real estate agent and with the buyer. In some cases, you might be able to smooth over a conflict with an agreement, payment or compromise that helps avoid legal trouble or major penalties.
Houseful can help you make smart decisions
Homebuying can be a daunting process, Houseful provides support and guidance at every step of the way. Sign up at houseful.ca.
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