My buyer defaulted due to financing. The sale of their home didn't go though so they are not able to get financing for their purchase. Sellers says they will sue to force the purchase. Contract says if buyer defaults, seller keeps earnest money & that equals liquidated damages. How can my buyer be sued for performance of contract if they don't qualify? What will a judge do?

Has a client of yours ever been sued over this? Any thoughts? TIA!

Was there not a contingency on them selling their home?

If the contract states that the seller retains earnest money as full liquidated damages then the seller CANNOT sue for breach.

It's an either or depending on how the earnest money and breach paragraphs are worded that was signed in the contract by the sellers and the buyers. The sellers can't double dip because they are mad. The judge will go by what was agreed and signed to in the contract and the buyers can counter sue in court the sellers for damages.

If the seller took me to court when it was clear the earnest money was the sole remedy chosen in the contract then I would counter sue them and win for lost wages from work,mental anguish,court costs,etc. Once the seller understands they don't have a leg to stand on they will back off.

Does your buyer still want the house? If so the sellers can give more time for your buyers to sell their home.

Of course I haven't seen the contract so I am just going on what little info you have provided and one small detail left out can change everything.

no legal advice

Thanks super! No, there was not a contingency for my buyer to sell their home. Buyer was willing to risk EM on that not happening.

But there WAS a contingency for financing, which is the condition we are backing out on. The contract does state that if after deadlines pass, loan doesn't fund, buyer can cancel contract & seller keeps EM for liquidated damages & exclusive remedy.

What are your additional thoughts with that info?

Again I can't see the contract so this is not legal advice of any kind.

From what you just posted the keywords being (exclusive remedy) would mean this is the sole recourse the seller is agreeing to if the deals falls through. The sellers signed it and the buyer signed it. If the listing broker or agent did not explain the remedies to the seller properly then that is on them not you.

This is nothing more than the seller blowing hot air. Now in some instances the seller can give back the earnest money to the buyer and then sue for specific performance depending on options in the purchase and sale agreement.The sellers need to move on and keep the earnest money.

Again I am just on the outside looking in and your best bet is your broker who can read the contract line by line and run by their legal counsel on retainer for any clarification or understanding of an issue.

Now the sellers can still sue the buyers. People can sue for anything whether it's allowed in the contract or not but it will get dismissed and the buyer will be awarded damages for a frivolous (without merit) lawsuit.

no legal advice

What's really funny is that they're suing someone with no money to buy their house... if they defaulted the contract because they couldn't get a loan, how exactly do the sellers expect to get paid for the house?

Judges always feel bad for the poor buyers who couldn't get a loan moreso than they do for sellers who can relist.