Prepare for the Fallout
When Breaking a Deal

Question: I am selling my home without the help of a broker. Can I back out of the deal? What are the consequences?

-- Janet, location not provided

Janet: Of course, you can always back out of any deal. The real question is, as you indicate, are you prepared to handle the consequences?

If you are the seller, you will probably want to offer the buyers back their deposit and perhaps grovel a bit, asking them to let you out of the sale. If you have a good reason (illness, infirmity, job loss so you can't move, etc.), they might go along out of the kindness of their hearts. On the other hand, if they discover you want to back out so you can sell for more money to different buyers, you can expect them to hold your nose to the grindstone.

Assuming you signed a properly drawn purchase agreement, getting out gracefully will depend on what escape clauses it contains. Many agents add an escape clause or two for their sellers to use, at least during the earlier stages of the closing process.

On the other hand, if you don't have any escape clauses and you back out, the buyers may sue you for "specific performance." In other words, they may go to court to demand that you continue with the contract and force you to sell the property. And, as with any lawsuit, there are usually costs and, potentially, damages.

My suggestion is that you contact a good real-estate attorney in your area to evaluate your situation before taking any action that might jeopardize you. A purchase agreement is intended to be a legally binding document; backing out of a fully executed one without good cause can have very serious consequences.

-- Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent books are "How to Get Started in Real Estate Investing" and "How to Buy a Home When You Can't Afford It" (McGraw-Hill, 2002).

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