Few things are more life-changing than selling your home to move to a new place. It’s a big commitment. That said, the slight terror the idea invokes is usually overshadowed by a sense of joy and excitement.
A new beginning has so many connotations, and most of them are a cause to celebrate. The key word here is, “most.” What happens if life happens and you change your mind after you’ve already accepted an offer? Can a seller back out of an accepted offer? In this post, we’ll explore the possibility of backing out of a real estate deal.
If you’re ready to sell your home, our detailed Seller’s Guide is a tool you will want to keep handy. Download your copy right here.
Cooling Off Periods and Canadian Real Estate
Since this post pertains to the legalities of real estate, it’s only natural that we begin with a disclaimer. We are not lawyers, so everything you read here should be taken as information only. If you need qualified advice for your specific situation, we recommend speaking with an experienced real estate lawyer.
There are numerous protections in place for consumers in Ontario, particularly when making large purchases. Oddly enough, most of these don’t apply to real estate, unless it’s a brand new condo. In that case, Ontario guidelines allow a buyer to cancel their transaction within 10 days.
Sellers unfortunately have no such recourse. Not that most people would sell their home on a whim. But if you do, consider it sold. There is not much you can do without consequences at that point.
There’s no doubt about it; some selling situations are more complicated than others. The posts below can help you rise to the challenge:
- How to Sell a House When One Partner Refuses in Ontario
- How To Make Selling a Home Easier During a Divorce
- Can You Sell Your Peterborough Home Remotely?
The Simple Answer
The simple answer is that you cannot back out of selling your home if you’ve already accepted an offer. However, since when is anything in life simple? Certainly not real estate, or law, for that matter.
Real estate contracts (also called agreement of purchase and sale, in Ontario) are legal and binding agreements, and they are very difficult to contest after both parties have already signed the documents. Often, the only time there is an out is if there is fraud, misrepresentation, or a significant error in the contract.
If you need to back out for any reason, the buyer could sue you for breach of contract. The court could award the buyer with damages or compel you to proceed with the sale as per your agreement. If the buyer then has to buy a different house at a higher price, they might be able to hold you liable for the difference or even recoup some of their moving costs. In rare cases, they might even seek extra damages for emotional distress.
Your one saving grace is that they would have to be able to prove their financial (and emotional) losses in court. It’s possible, but it could be a long and stressful path for both parties.
At the very least, you’ll need to return the buyer’s deposit, along with any additional compensation ordered by the courts. Selling a house is serious business. The bottom line is you want to be sure it’s something you really want before accepting an offer.
Real Estate Can Be Complex
While the buyer does have legal recourse, it can be costly and stressful to pursue damages of any kind. To keep the peace, they may agree to work with you, especially if the market favours their chances of finding a new house. If both parties sign a written mutual release agreement, you can potentially back out of the sale without enduring a harsh penalty. Just keep in mind that this is a big “if.” Most of the time, if a buyer places an offer, they are not going to be easily persuaded to let you off the hook.
You could also have a clause in the purchase agreement that allows you out of the transaction if a certain condition is not met. It’s rare for a seller to impose conditions, but it does happen, and it could give you a clear and legal exit.
For example, you could have an “escape clause” as part of your contract or a seller’s purchase condition that ensures you can find another home; otherwise the deal is off.
Putting conditions into your offer can seem like a simple solution. However, they can impact your ability to find a buyer for your property at all. Conditional offers are far more common and socially acceptable from the buyer’s perspective. Even then, a buyer has to be conscientious of what is happening in the current market. In a busy seller’s market, even the most cautious buyer often needs to place a firm offer to secure the home they want.
Buying a house can also have its share of challenges. The posts below might help:
- How to Buy a House With Bad Credit
- What to Know Before Buying Vacant Land in Ontario
- A Guide to the Current Peterborough Housing Market
Make Your Decisions Carefully
The best solution to having to back out of a sale is to avoid the situation in the first place. Selling your home is a sobering decision, and you should always weigh your options carefully before proceeding.
At the very least, you can change your mind about selling after your house hits the market but before accepting an offer. This could be potentially disadvantageous if you need to relist shortly afterward. On the plus side, it will prevent you from getting into any legal trouble.
“If in doubt, wait it out” is an excellent motto to adopt when it comes to real estate, whether you’re buying or selling a home. Even better, talk it out. Discuss all of your options with your family and loved ones about your vision for your future. When everyone is all on the same page, an experienced Realtor® can help you navigate the current market and achieve the best possible outcome.
When you’re ready to sell your home, our Peterborough real estate agents can help you get the results you’re looking for. Reach out to team@jeffandkatie.ca or call 705-243-9797 to start the conversation today.
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