Seller canceling the contract, options?

I have an interesting situation.

Here is the timeline:
Submitted a Non contingent offer on Feb 14 with 27 day close on Mar 10th.
There were some issues with appraisal from seller’s side and we extend the contract to Mar 22.
On Mar 19th When we were ready to close, title company says, they cant proceed because there is a lis pendes filed by seller’s relative claiming ownership.This is a trust sale. Trustee wants to sell but the benficiary’s mother I believe is the one who filed the lis pendes.
Court date is on June 4th and seller’s attorney could not get a date earlier to dismiss the pending lien. They are confident that the relative doesn’t have any legal basis to block the sale but this is causing the delay.
I dont want to stay in contract as these things get delayed with court proceedings etc.

Seller is ok to cancel and refund EM deposit, reimburse transaction costs like appraisal and inspections.

Can I get anything else out this in terms of damages for loss of opportunity, disinvestment of my down payment (this actually helped me because of how the market’s doing now) to buy another home? Some sort of settlement? Is this worth pursuing?


I’d only pursue legal action if you end up not closing. Look at the good side. By the time you close, it’ll probably increase in value another 10%!

1 Like

I don’t think it is worth pursuing legally, esp if your time is valuable to you. Trust sales are cheaper for these kinds of reasons. It’s known to often not be a simple process. Lots can go wrong and i would expect they’re covered by the legal language. My agent told me a trust sale can take up to 6 months because of different things coming up, and steered me away from it.

1 Like

I agree with Lulu and Marcus.

Trust sales are challenging and lot of uncertainties associated with it. Somewhere in the contract they would have quoted this is trust sale…etc with all risks.

If you really feel hitting a good deal, better to hold and close it as this is growing (crazy) market. Seller is confident to cancel the contract as they know it can be sold after court confirmation without loss of current contract amount.

Only negative is how long lender could extend the lock period and how much cost associated with it.

1 Like

Not worth pursuing


Dont they only do 60 days?

Lock period? Yes, they do 30 days, 45 days or 60 days, but there is a payment (even hidden if they do not openly charge you) associated with such locks.

Thanks @Jil @marcus335 @Lulu

Yes my rate lock was only 30 days, could be extended for 2 addl weeks but at a daily cost. Dont think this is the issue, we can start over the loan again. They would use same appraisal in June.

My question is can I stay in contract asking for my EM deposit back?

As a buyer what levers do I have?

You can negotiate with seller, keeping the contract & EMD as such, without starting/restarting the finance now.

How do you think whether the home is worth buying at this contracted price in 6 months or 1 year? Is it attractive?

First, if the decision is near term, like 15 days or 30 days, if you feel you can get the home, then there is a point in extending the contract.

If it is 3 months or 6 months, do you still think it is a deal at the price you have given? If so, talk to seller, keep the EMD, but not to extend lock paying additional money.

Negotiate with seller that you are ready to re-initiate the finance process once court finalizes deal. Have also additional clause if the court work exceeds 3 months or 6 months (whichever you feel comfortable), you have option to cancel the contract without any obligations (i.e., EMD should be given back without any deduction or penalty).

It is up to you to carefully evaluate the future options and negotiate with seller. If it is not worth, walk away with deposit.

Contract is offer, acceptance, and consideration. If you remove your earnest money, then you’d be risking them looking for a higher bid. You could see if they’d agree to a reduction of EM. You’d need to both sign an addendum agreeing to the new EM amount.

Have you signed an addendum with a new closing date? I’d do that ASAP. It doesn’t seem they are trying to screw you, but they could. They could say you didn’t perform and close then keep your EM.

1 Like