Once a sales agreement has been signed, both parties usually assume the deal is final. But what happens if the seller suddenly decides not to go through with the sale? Can everyone simply walk away, or are there serious repercussions?
The short answer is yes—there can be significant consequences, and for the seller, this decision could prove very costly.
Property sales don’t always proceed as planned. Sometimes, external factors, such as the bank declining the buyer’s bond, the buyer passing away, or an undiscovered structural defect coming to light after the agreement is signed, can cause a sale to fall through. In such cases, both parties generally part ways without major complications. However, if the seller accepts a higher offer (without a clause in the agreement allowing for this) or simply decides not to sell anymore, the situation becomes far more complicated.
Possible Consequences for the Seller
In these circumstances, several outcomes are possible. For one, the buyer may sue the seller for financial damages. For example, imagine a buyer agrees to purchase a home for R900,000, but the seller backs out of the deal. The buyer then has to buy a similar property at R1,000,000 because nothing else is available in the same price range. The seller could be held liable for the R100,000 difference in price, as well as any other out-of-pocket expenses incurred by the buyer.
The seller might also be responsible for conveyancing costs. Depending on how far along the process is, the conveyancer (attorney) may have done considerable work, and those fees will still need to be paid, regardless of the sale's outcome.
The Estate Agent’s Role and Rights
A common misconception is that estate agents do very little to justify their commission. In reality, selling a property often requires substantial effort. Agents spend time advertising the property, sourcing buyers, and conducting viewings. If a sale is cancelled by the seller, the agent may still have a right to claim their commission, especially if they’ve fulfilled their mandate by introducing a willing buyer to a willing seller. From the agent’s perspective, they’ve already performed the job they were hired to do.
Why Sellers Change Their Minds
It’s easy to assume that a seller pulls out of a deal out of greed, perhaps because they’ve received a better offer. However, sellers may change their minds for many other reasons. For instance, a seller might decide to stay in the home due to a personal change, such as a job transfer falling through. Or, they might simply have second thoughts about selling. While these reasons may be understandable, they do not absolve the seller from their obligations under the signed sales agreement.
The Bottom Line
Selling a property is a significant legal commitment. Once a sales agreement is signed by both the buyer and the seller, it becomes a legally binding document. If a seller decides to back out, they could face significant financial penalties, including being liable for the buyer’s losses, conveyancing fees, and the estate agent’s commission. In many cases, it’s far more expensive to cancel a sale than to simply follow through with it.
The decision to sell a property should not be taken lightly. Sellers should be absolutely certain of their intentions before entering into a sales agreement to avoid potential legal and financial repercussions later on.
For expert real estate advice and support in the Roodepoort area, feel free to contact me, Morne at RE/MAX Masters. With my dedication to excellence and years of experience, I can guide you through every step of the buying and selling process to ensure a smooth and successful transaction. Let's make your real estate journey a positive one!
Morne | RE/MAX Masters
Your trusted Roodepoort Property Practitioner
Areas of service: Little Falls, Wilgeheuwel, Amorosa, Constantia Kloof, Helderkruin, Wilro Park, Roodekrans, Honeydew, Ruimsig, and more.