For donations Click Here

Liability for Buyer who Backs Out

If a buyer for an apartment backs out of the sale prior to signing any written agreement, but after several months of negotiation and having agreed to buy at a set price, does the seller have a right to demand that the costs incurred be paid by the x-buyer (such as lawyer fees)?
Can he also demand that any tax benefits that he lost be paid as well (capital gains tax)?
Can he also claim that because of the last minute reversal, at which point another purchase was already negotiated and agreed, he was forced into selling the apartment for a lower price? Can he claim the loss of that difference in price?
Basically what are the rights of the seller when the buyer backs out right before the signing but after verbally agreeing to the price and to all the terms?


If everything has been negotiated, and both sides have agreed on terms and on the sale, it follows that it is forbidden to back out.¬†However, although he will have “tar’omes” against him (a moral claim against behavior in bad faith) the other party cannot enforce the sale.

Concerning costs incurred, the other party has the right to claim lawyers fees and other costs that were incurred as a direct result of the parties having agreed to the terms and to the sale (this halachah is ruled by the Shulchan Aruch concerning parties that agreed to a wedding; the party that backs out must pay the expenses incurred by the other party). This applies specifically to costs incurred after the sides had come to agreement over the sale and its terms.

However, indirect financial losses such as selling the apartment for a lower price, cannot be claimed.

Best wishes.

Leave a comment

Your email address will not be published. Required fields are marked *