The Saugeen Team - What Happens If a House Fails To Close?

What Happens If a House Fails To Close?

Many people wonder what happens if the sale of a home fails to close. What do the buyer & seller have to do? Who gets the depost back?

If a house fails to close, the deposit is distributed according to the agreement of both parties (buyer and seller). What must happen is that the buyer and seller sign what is called a Mutual Release, releasing both parties from the contract and stating how the deposit will be distributed. If however, the parties can not agree, Civil action must be taken and a Judge will award damages and direct the brokerage holding the deposit on how the funds should be dispersed. Only through the Mutual Release or through a court order can the deposit be removed from the brokerage's trust account without the house closing. As for who gets the money, that is dependent on the individual circumstances; each situation is different and it is best to discuss with a lawyer how best to proceed when a contract is cancelled.

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