Q: What is the penalty, if any, for deciding not to close on a home if you’re already in escrow?
A: It depends on what your contract says. Are you withdrawing because the house failed inspection and you have an inspection rider that permits you to cancel the contract in this case? Or, are you backing out simply because you’ve changed your mind.Typically, when a buyer backs out of a deal, he or she loses the earnest money (so called because it shows how “earnest” you were about buying the property). But the seller may have the right to sue you for his or her damages caused by your failure to close. Whether a seller has this right will be spelled out in the contract for purchase of the home.
Please consult with a real estate attorney for more details.
Published: Aug 4, 2007