Unless the buyer has a valid reason for backing out, such as the inspector's discovery of undisclosed defects, the buyer could be liable to the seller and the realty agent for damages. If the buyer can't qualify for a mortgage and the purchase offer contained a financing contingency clause, then the buyer has a valid reason for canceling the sale. Otherwise, the buyer becomes liable to the seller for damages if the house later sells for less to another buyer. In rare cases, where there aren't any other buyers for the property, the seller could sue the buyer for specific performance of the sales contract to force a purchase. The court said monetary damages were inadequate to compensate the seller for the buyer's sale cancellation, so the buyer was ordered to complete the purchase.
Buyers often sue defaulting home sellers for specific performance of the sales contract.
Such a lawsuit, when successful, orders the seller to deliver the deed as agreed. To prevent the seller from selling to another buyer, a 'lis pendens' is usually recorded against the home's title. This document warns any buyer or lender dealing with the property that litigation is pending. If the remedies above prove ineffective, there are other possibilities for disappointed home buyers and sellers. When the home buyer can prove intentional fraud by the seller or the real estate agent, also known as deceit, the buyer can sue for monetary damages plus punitive damages to punish the wrongdoer.