I'm somewhat familiar with the process of buying a house in the United States and I imagine the process is similar in other countries. Normally, the would-be buyer deposits some "earnest money" with a third-party at the time the contract is signed. If the buyer backs out before the closing, he or she forfeits the earnest money and the seller gets to keep it. I understand this to be protection for the seller against a buyer breaking the contract.

On the other hand, does the buyer have any protection against the seller breaking the contract? Sure he or she will get his or her earnest money back but that doesn't provide much disincentive to the sellers to keep their end of the bargain. It's easy to come up a scenario where the buyer would like protection (e.g. they need to sell their old house in order to come up with the down payment on the new house, but they're concerned that after they sell their old house the person they're trying to buy from will back out and they'll have nowhere to live). Is there anything that is done to protect them?

1 Answer 1


The contract should address this issue. It will specify the types of remedies and damages that would result if either side tries to back out of the deal.

There can be monetary penalties, and the courts can force the seller to complete the deal.

Where I have experienced this it generally takes only a gentle reminder from the agent regarding the consequences.

There is also limited indirect protection via the contract between the seller and their real-estate agent. Many times that contract will require the seller to pay the agent their commission if there isn't a valid reason to cancel the deal. The contract was to find a fully qualified buyer. The threat of having to pay 6% of list price to the agent, and not selling the house can be enough to get them to complete the deal.

All this assumes there was fraud, which could bring in criminal penalties.

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