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Seller's rights when deal collapses

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Junior Member
We have got an offer for our house. We and the potential buyers have signed it and agreed to 2 subjects (inspection and financing). 10,000 was supposed to be with the trustee to hold the deal. The subject removal day is tomorrow, 15 September.

Yesterday, when I phoned my realtor to see how things were progressing he advised me that the deal collapsed because the rental suite in our place is illegal. This is a common knowledge that no rental suites are legal in Lower Mainland and I find it hard to believe that anyone who is looking for extra income by renting would not know about it. Also, this wasn't one of the subjects of the deal.

What rights do we as the sellers at this moment. Could buyers walk away from the contract?

Has anybody been through it?

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