Home Seller Tricked Us - Is this legal?

Question

We signed a contract to purchase ($700k) home and entered into escrow. The home inspection showed a lot of repairs, so we decided to cancel the contract. My realtor sent “Cancellation of Contract” to the seller.

The seller called us back saying that they are willing to fix the repairs if we are interested in moving forward. We decided to move forward and ordered an appraisal. The appraisal came at $660 and now the seller is not happy. Our contract stated that if the appraisal comes lower than the contract price, we will pay an additional $10k over the appraised value. In this case, it is $660+$10=$670. Now seller is trying to use the cancellation notice sent by us earlier against us.

Seller’s agent’s response after appraisal: “As you're aware the Buyer cancelled this escrow on 12/23/2021. If your Buyer would like to resurrect this transaction the Seller is willing to at $700.”

Buyer’s agent’s defense: “You are correct that we sent in a cancellation on 12/23/2021. However, you reached out via phone and asked us what we could do to keep the transaction going. In "Good Faith" we retracted our cancellation. I have an email correspondence with you from on Jan 7th stating "We are back in play with this file". We conducted the appraisal to proceed with the file. We provided the lender everything needed to prepare for loan docs. So to reiterate, the cancellation was not finalized AND was retracted. Technically, the seller would have to abide by the contractual obligation of the RPA and honor $670,000 for the purchase price.”

Seller’s Response Back: Seller added their signature to the cancellation notice that we sent them by 1 month ago. Told us that the contract is canceled.

Is this legal? Can the seller back out just like that after all of the activities we did?

Account Closed · Answer

It gets tricky.

Usually you need "in writing" any change of agreement. Once a contract has been canceled and signed by both parties you are technically starting from scratch again. I would guess you had a date on the agreement that everybody had to have their part done by or the sale fails. If you submitted a cancellation and they signed it and delivered it to you or your agent by that date, it gets really hard to win in court.

Some courts accept emails as evidence if there was a "meeting of the minds". Depending on how things were worded it may make a difference in your argument but it may not. And, there is no guarantee that the court will accept an email as sufficient evidence.

If they won't cooperate, you're faced with a few choices, 1. agree to their new price in writing, 2. walk from the deal 3. Sue them for specific performance.

To do #3 prepare to spend about $25,000 on legal fees and 2 years fighting over the property with no guarantee of winning. The judge will ask what your damages are, and so far your damages are the cost of the inspection and appraisal if they return your earnest money.

Arsen Atanasovski · Answer

I think I wrote something about this topic months ago and everybody on the post blew it off, good old appraisals!

But yes everything the seller or seller agent tells you in writing with signatures, then you can do what we Americans do best.......lawsuits.