When can a seller back out of a home sale? The answer may vary. Sellers can back out of a home sale without ramifications in the following instances:

  • The contract hasn’t been signed. Before a contract is officially signed, a seller can kibosh a deal at anytime (that’s what happened to me).
  • The contract is in the five-day attorney review period. Most home sales involve the use of a standard real estate contract, which provides a five-day attorney review provision. During this time, the seller’s attorney or the buyer’s attorney can cancel the contract for any reason. This allows either party to back out without consequence. Although the seller can legally back out during an attorney review period, it’s not very common.
  • The seller planted an escape hatch in the contract. Sellers can place addendums within the contract that say they can back out without penalty—like a contingency that they have to find a new place where they want to live first.
  • The buyer doesn’t adhere to the contract terms. One common buyer issue is the buyer failing to secure a mortgage in a certain time frame. If sellers don’t want to wait around for the buyers to find financing elsewhere, they can move on.
  • The buyer requests repairs the seller is unwilling to do. When home buyers get a home inspection, they’ll often request that sellers make repairs based on that report, or issue a “repair credit” to cover those costs. The thing is, sellers can always refuse—a move that could “constructively cancel” the real estate contract. In essence, the seller forces the buyer’s hand, since constructive cancellation requires the buyer to either back off on the requests or back out of the deal, says Brian J. Thompson, a CPA and attorney in Chicago.

When a home seller can’t back out of a sale

But aside from the above reasons, once a real estate transaction has a fully executed purchase agreement that’s past the five-day mark, it’s not that easy for a seller to flake out. Are there serious consequences if a seller reneges on a deal right before closing? “Most definitely,” says Denise Supplee, operations director of SparkRental.

That’s because in the laws governing real estate transactions, there’s something called a “specific performance” provision. This entitles buyers to force the seller to honor their obligations under the contract. It entails taking the seller to court and forcing the completion of the sale.

The problem with this route is it takes time and money for a buyer to enforce, and most home buyers don’t want to wait a few years to get into a new home while their cash deposit sits in escrow. Most buyers would probably let it go, says Gary Lucido, president of Chicago’s Lucid Realty.

Yet that doesn’t mean a buyer has to just let a flip-flopping seller walk away scot-free. Instead, a jilted buyer can sue for damages from the seller for breach of contract. The lawsuit can include recouping monies the buyer spent on temporary housing (especially if the buyer sold an old home to buy the new home) and costs for storing furniture. Monetary damages could also include legal costs as well as inspection, survey, and HOA application fees.