What Happens If a Seller Backs Out of a Real Estate Contract in NY?

Can a Seller Legally Cancel a Home Sale?

Once a seller signs a contract in New York, they are legally bound to follow through with the sale unless specific contingencies allow them to cancel.

📍 Brooklyn Context: Many homeowners in neighborhoods like Bensonhurst and Dyker Heights are approached by buyers with competitive offers. If a higher offer comes along after signing a contract, some sellers may want to back out. However, this can result in legal consequences.

🔹 Further Reading: New York Real Estate Laws

What Are the Legal Consequences of Backing Out?

1️⃣ The Buyer Can Sue for Breach of Contract

Once a seller signs a contract, a buyer can enforce the agreement in court.

📌 Example: A Dyker Heights homeowner signs a contract to sell their home for $950,000. A week later, another buyer offers $1 million. If the seller tries to cancel, the original buyer can sue for damages or force the sale.

✅ Solution: Work with an attorney to understand contingencies before signing any agreement.

2️⃣ Seller May Have to Return Buyer’s Deposit—and Pay Additional Damages

In NYC, buyers typically put down a 10% earnest money deposit when signing a contract. If a seller backs out without a valid reason, they must return the deposit and may also have to pay for the buyer’s financial losses (e.g., appraisal fees, inspection costs, etc.).

📌 Example: A seller in Gravesend cancels a sale after the buyer paid for inspections and appraisals. The buyer may demand reimbursement of $5,000+ in fees.

✅ Solution: Only enter into a contract if you are fully committed to selling.

When Can a Seller Back Out Legally?

There are a few scenarios where sellers may cancel without penalty: ✔ Contingencies in the contract (e.g., seller cannot find a new home)
✔ Buyer fails to meet financing requirements
✔ Legal loopholes (fraud, misrepresentation, etc.)

📌 Example: A Brooklyn Heights seller includes a home purchase contingency stating they will only sell if they find a new home. If they cannot, they may legally withdraw from the sale without penalties.

📞 Considering backing out of a real estate contract? Contact our firm before making a costly mistake!

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