A seller in Vermont generally cannot back out of a binding real estate purchase and sale contract simply because the seller changes their mind. Once the seller and buyer have entered into a binding contract, both parties are expected to comply with its terms. A seller may have a right to terminate in certain circumstances if the contract specifically provides that right, the buyer fails to satisfy a contractual obligation, or both parties agree to terminate the contract.

A seller who wants to cancel a Vermont real estate contract should speak with an experienced Vermont real estate attorney before taking any action. Improperly terminating a contract can expose a seller to significant legal consequences, including a lawsuit seeking to force the sale of the property.

Can a Vermont Home Seller Change Their Mind After Signing a Contract?

Usually, no.

A purchase and sale contract is intended to create binding obligations between the buyer and seller. Once a seller has entered into a binding agreement to sell Vermont real estate, simply deciding that the seller no longer wants to move is ordinarily not enough to cancel the transaction.

This is true even when the seller has a very understandable reason for wanting out.

For example, sellers sometimes want to cancel because:

• They cannot find suitable replacement housing.
• Their contract to purchase their next home falls through.
• They receive a better offer from another buyer.
• They decide the agreed purchase price is too low.
• The property increases in value after the contract is signed.
• They have a disagreement or personality conflict with the buyer.
• One of several owners changes their mind about selling.

None of these circumstances, standing alone, ordinarily gives a seller the right to disregard an otherwise binding contract.

The actual rights of the seller, however, depend on the language of the particular purchase and sale contract and the circumstances surrounding the transaction.

Is There a Three-Day Right to Cancel a Vermont Real Estate Contract?

No general three-day "cooling-off period" applies to an ordinary Vermont residential real estate purchase and sale contract.

This is an important misconception. People sometimes hear that they have three days to cancel a contract and assume that the same rule applies when selling a home. It generally does not.

A seller should therefore not sign a purchase and sale contract with the expectation that there will automatically be a few days afterward to reconsider the decision.

Before signing, the seller should make sure the contract adequately addresses any circumstances that could prevent the seller from completing the transaction.

What If the Seller Cannot Find Another Home?

This is one of the more common reasons a Vermont seller may want to get out of a transaction.

A seller may accept an offer believing that suitable replacement housing will be available, only to discover that they cannot find another home. Another common scenario occurs when the seller is already under contract to purchase another property and that transaction unexpectedly falls apart.

Neither situation automatically gives the seller the right to cancel the sale of their existing home.

If the seller's willingness or ability to sell depends on finding suitable replacement housing, the seller should have an appropriate replacement-housing contingency included in the purchase and sale contract before signing it.

This is not something a seller should leave to an informal understanding or assumption.

A properly drafted contingency might make the transaction dependent upon the seller finding suitable replacement housing within a specified or reasonable period. The precise language is important because it determines when and under what circumstances the seller may terminate.

If finding another home is essential to the seller, addressing that issue in the contract is a must.

What If the Seller Gets a Better Offer?

Receiving a better offer does not ordinarily allow a Vermont seller to cancel an existing binding purchase and sale contract.

Suppose a seller accepts an offer for $500,000. Several days later, another prospective buyer offers $525,000. The additional $25,000 may make the second offer attractive, but it does not erase the seller's contractual obligations to the first buyer.

The same principle applies if the seller simply realizes after signing that the property may have been worth more than the agreed purchase price.

A purchase and sale contract would have little value if either party could abandon it whenever a financially better opportunity appeared.

What If the Seller and Buyer Are Not Getting Along?

A breakdown in the relationship between the buyer and seller generally does not give the seller a right to cancel the contract.

Real estate transactions can become stressful. Disputes may arise over inspections, repairs, closing arrangements, personal property, deadlines, or communications between the parties.

A seller may become frustrated enough to decide that they simply do not want to sell the property to that particular buyer anymore.

If the buyer is continuing to perform their contractual obligations, however, a personality conflict or disagreement ordinarily does not provide an independent basis for the seller to terminate the contract.

The seller's rights should be determined from the contract, not from how well the parties are getting along.

When Can a Seller Back Out of a Vermont Real Estate Contract?

There are circumstances in which a seller may have a legitimate contractual right to terminate.

The most obvious example is when the purchase and sale contract contains a seller contingency and the conditions necessary to exercise that contingency have occurred.

A replacement-housing contingency is one example.

Some Vermont contracts also contain provisions giving the seller certain rights if the buyer does not demonstrate an ability to complete the purchase. Depending upon the contract, this might involve the buyer's failure to demonstrate sufficient available funds or satisfactory progress toward obtaining required mortgage financing.

A buyer may also fail to satisfy another contractual obligation or deadline. Depending upon the language of the agreement, that failure may give the seller a right to terminate.

The important point is that the seller should not assume that a particular problem permits cancellation. The contract needs to be reviewed to determine whether a termination right actually exists and whether any requirements for exercising that right have been satisfied.

Can the Seller Cancel Because the Buyer Missed a Deadline?

Possibly.

Real estate purchase and sale contracts contain deadlines and obligations that the buyer must satisfy. If a buyer fails to comply with a material contractual requirement, the contract may give the seller a right to terminate.

Whether a particular missed deadline allows termination depends on the contract and the circumstances.

Before declaring the contract terminated, the seller should have a Vermont real estate attorney review the agreement and the buyer's conduct. Taking action based on an assumed default can create an entirely new problem if the seller did not actually have the right to terminate.

Can the Buyer and Seller Simply Agree to Cancel the Contract?

Yes.

Even when neither party has a unilateral right to terminate, the buyer and seller can agree to a mutual termination.

This does happen in Vermont real estate transactions, particularly when both parties have concluded that they would prefer not to proceed.

A mutual termination should be properly documented in writing and should address matters such as the buyer's deposit and any other outstanding obligations between the parties.

A seller should not assume, however, that a buyer will agree to a termination merely because the seller wants out. If the buyer still wants the property and is complying with the contract, the buyer may have little incentive to release the seller from the agreement.

What Happens If One of Several Sellers Changes Their Mind?

Changing one's mind does not ordinarily undo a contract that the seller has already signed.

For example, suppose siblings jointly own a Vermont property and all of them sign a binding agreement to sell it. One sibling later decides that selling the family property was a mistake.

The fact that one owner now regrets the decision does not ordinarily release that seller from the contract. Once that seller has entered into the binding agreement, he or she remains subject to the contractual obligations.

This is another reason all owners should be comfortable with the decision to sell before signing a purchase and sale agreement.

What If the Seller Dies or Becomes Incapacitated Before Closing?

The death or incapacity of a seller generally does not make an otherwise binding real estate contract simply disappear.

If a binding contract was entered into before the seller's death or incapacity, the transaction generally remains alive, although additional legal and procedural steps may be necessary to complete the sale. The exact procedure will depend on the circumstances, including how title is held and who has legal authority to act for the seller or the seller's estate.

Because these situations can involve probate, estate planning documents, powers of attorney, trusts, or other legal issues, legal advice should be obtained promptly.

What Can a Buyer Do If a Vermont Seller Refuses to Close?

A seller should not assume that refusing to sign the closing documents will make the transaction go away.

When a seller breaches a binding real estate contract by refusing to complete the sale, the buyer may have significant legal remedies.

One particularly important remedy involving real estate is specific performance. Instead of merely seeking money from the seller, a buyer may seek a court order requiring the seller to perform the contract and convey the property.

In other words, under appropriate circumstances, refusing to close may ultimately result in litigation seeking to force the seller to sell the property anyway.

A buyer may also pursue monetary damages or other remedies depending on the contract and circumstances.

Litigation involving a failed real estate transaction can be expensive, time-consuming, and disruptive for everyone involved. A seller considering refusing to close should understand the potential consequences before taking that step.

Example: The Seller's Replacement Home Falls Through

Consider this example.

A Vermont homeowner signs a contract to sell her home. She intends to use the proceeds to purchase another house and is already under contract for the replacement property.

Two weeks later, the purchase of her new home falls through. She no longer has anywhere she wants to move and tells her real estate agent that she wants to cancel the sale of her existing home.

The seller's contract with her buyer, however, does not contain a replacement-housing contingency.

The failure of the seller's next purchase does not ordinarily give her an automatic right to cancel the existing sale. If the buyer remains ready, willing, and able to perform, the seller may still be obligated to complete the transaction.

Had the seller made the sale expressly contingent upon obtaining suitable replacement housing, the result might be different depending upon the wording of that contingency.

This example illustrates why sellers should consider their housing needs before signing the contract, not after a problem occurs.

What Should a Vermont Seller Do Before Trying to Cancel a Contract?

Speak with a Vermont real estate attorney before taking action.

A seller should avoid announcing that the deal is canceled, signing another purchase and sale contract, refusing to cooperate with the closing, or otherwise taking action based solely on the seller's own interpretation of the agreement.

The first question should be: Does the contract actually give the seller a legal right to terminate under these circumstances?

An attorney can review the purchase and sale agreement, determine whether a contingency or buyer default may provide a basis for termination, and advise the seller about the consequences of the available options.

Peet Law Group represents buyers and sellers in residential real estate transactions throughout Vermont. If you are involved in a Vermont real estate transaction and have questions about whether a purchase and sale contract can be terminated, our attorneys can review the agreement, explain your rights and obligations, and help determine the appropriate next steps.

Peet Law Group can represent either the buyer or the seller in a transaction, but cannot represent both parties when their interests conflict.

Contact Peet Law Group to speak with an experienced Vermont real estate attorney about your Vermont real estate transaction.