A buyer backing out of a signed real estate purchase agreement can create serious financial problems for a seller. You may wonder whether you can keep the earnest money, seek damages or require the buyer to complete the purchase. The answer depends on the contract terms and the reason for the breach.
When a buyer breaches the agreement
A buyer breaches a purchase agreement when they fail to meet a required obligation without a valid contractual or legal reason. For example, a buyer may refuse to close after removing contingencies or fail to provide agreed-upon funds.
Not every canceled transaction counts as a breach. A financing contingency, inspection provision or another contract term may allow the buyer to withdraw under certain conditions.
What remedies may be available?
Under Washington law, a seller may have several options when a buyer breaches a purchase agreement:
- Earnest money: The seller may be entitled to retain the deposit if the agreement permits it and the buyer has no valid right to recover the funds.
- Damages: A seller may seek compensation for losses caused by the breach, such as certain resale-related costs or a difference between the contract price and a lower resale price.
- Specific performance: In some circumstances, a seller may ask a court to require the buyer to complete the purchase. Courts do not automatically grant this remedy.
- Contractual remedies: The agreement may establish additional rights, notice requirements or procedures that affect the seller’s options.
What should you do after a buyer breach?
Review the purchase agreement before taking action. Identify the buyer’s missed obligation, any applicable contingencies and the contract’s notice provisions. Keep records of communications, expenses and efforts to address the failed transaction.
A seller should also consider whether the buyer’s conduct actually violates the agreement or whether the contract permits cancellation.
How Washington law determines what you can recover
A buyer’s failure to close does not automatically mean the seller can keep every deposit or recover every financial loss. The contract, the facts and applicable Washington law determine which remedies may be available. Understanding those details helps sellers make informed decisions about how to proceed.