Cancellation of Closing

I live in Tennessee. The closing day set for the sale of our home, and purchase of the new home was set for Wed. The family purchasing our home, also had someone purchasing their home, and that family had a family purchasing their home. All the closings were contingent on the sale of the homes. All the closings were to take place within the same time frame. On the first sale, the individuals involved decided on the day of their closing, they did not like results of the appraisal. (They had hoped for 10K over purchase price and only appraised for 3,500 over). So they decided not to go through with it. Now this started the domino effect. Three days before all the remaining closing were to take place all parties are trying to figure out what happens next. Moving companies have been contracted, homes packed up.

My question is, legally, what can be done. It would seem as though once we are this close to closing, this could not happen. These people had bank approval, that was not the issue. It is incomprehensible to me that this could occur so close to our closing. Is the loss of their earnest money the only penalty this family will incur?

[JETX]

If your sale was contingent on the buyer selling his house and his sale fell through, he can exercise his contract right to void the sale. And, if he does this, it is very likely that they (your buyers) would get their earnest money back (what does YOUR contract say in the event of the contingency???).

Ultimately, the first person in the 'chain' is the only person who might have legal recourse against the person who breached HIS agreement (unless of course that included some contingency).

Thank you for your reply. It is just very troubling to all of us who has assumed we would be in our new homes, and had planned accordingly. Money was spent on movers, packing, etc. etc. And all this person lost was earnest money.

[JETX]

You could certainly talk with an attorney to see if you have any rights against the person who backed out, but it is extremely unlikely that you would (due to the contingency clause and the fact that the 'breacher' had no direct contractual relationship to you).

I would like to comment on the situation. The people buying the home who backed out due to the appraisal at closing is wrong. The appraisals are done way in advanced prior to closing giving the buyer adequate time...the appraisal issues should of been noted in the offer...such as; offer subject to appraisal at the satisfaction of buyer. If appraisal came in lower than sale price than you renogotiate price or the buyer has the right to withdrawl...but only if noted in Purchase Agreement. They had plenty of notice to withdraw at that point. I would say they could be made to perform on that contract. I would contact an attorney in your state. I would definitely keep the earnest deposit.

Read over your purchase agreement and see if there was a time fram on buyer contingencies about the appraisal/financing issues.

Good luck!!

[JETX]

Lexus:
In a direct buyer-seller contract you would be correct. However, you seem to have missed the fact that this seller (the author) had NO direct contract with the party that breached THEIR contract. In fact, the breach occurred several levels away from the author.

Secondly, our author's contract DID have a 'buyer contingency' that protected them in this direct contract. This contingency clause would mean that your advice ("keep the earnest deposit") would not stand.