What happens if you cannot close

First, the honest version

A firm agreement of purchase and sale is a binding contract. If you do not complete it, you are in breach, and the consequences are not limited to walking away from your title="Money paid to the listing brokerage when your offer is accepted. It is credited against the purchase price on closing, not an additional cost.">deposit.

This page is not written to frighten you. It is written because people in this position are usually given a vague answer, act on it, and make their exposure worse in the two weeks that follow.

What the seller can do

The seller keeps the deposit. That happens first and is rarely disputed.

The seller then puts the property back on the market. If it sells for less than you agreed to pay, they can sue you for the shortfall, plus the costs of carrying and reselling the property in the meantime. In a rising market the shortfall is often zero and the matter ends with the deposit. In a falling market it can be very large.

The claim is against you personally. A judgment can be enforced against your other assets and, in some circumstances, registered against property you own.

What actually helps

Act before the closing date. Almost every workable outcome depends on negotiating while the seller still wants the deal to close. After the date passes, their incentive shifts from completing to documenting damages.

Find out whether the shortfall is bridgeable. Many failed closings are not about the whole purchase price. They are about a gap of thirty or fifty thousand dollars created by a lender reducing an approval late. Private and B-lender financing is expensive, but closing at a high rate and refinancing in a year is frequently cheaper than being sued for the difference on a resale.

Get the right kind of lawyer. The lawyer handling your conveyance is not usually the person to advise you on breach and damages. You want a real estate litigator, and you want them now rather than after a claim is issued.

Do not sign a mutual release without advice. A release ends the contract and settles the deposit, but it can also waive claims you did not know you had, including claims against a lender or brokerage whose conduct contributed to the failure.

If the purchase is a new build

Builder deals differ in two ways that matter.

Deposits are usually much larger, often 15 to 20 per cent staged over the construction period. And the builder's remedies are set out in the agreement itself, drafted by the builder, and typically broader than a standard resale contract.

Whether your deposits carry warranty protection depends on the type of home and the applicable limits. Do not assume they are fully protected, and do not rely on a general summary of the programme when the specific limits are what determine your exposure.

What to do in the next 48 hours

Gather your agreement of purchase and sale with all schedules and amendments, every mortgage commitment and any notice of change from the lender, and your deposit receipts. A litigator can assess your position quickly with those three things and very slowly without them.