Breaking a Massachusetts Real Estate Contract

by Bill Gassett on May 27, 2010 · 29 comments

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Breaking a Massachusetts Real Estate Contract

Massachusetts Real Estate contract

When a Real Estate client expresses a desire to break a Real Estate contract you know the next few days of your life are probably not going to be too pleasant. When people are looking to break a contract it is usually a highly charged emotional event!

In Massachusetts we are a two contract state. When a buyer wishes to purchase a property, more often than not they will fill out what is known as an offer to purchase contract.  This is later followed up with a purchase and sale agreement which has the same terms and conditions as the offer form but spelled out in much greater detail.

The offer to purchase contract includes all the major terms in the deal including the offer amount, consideration which is the amount the buyer is putting in escrow to secure the property, as well as the agreed upon closing date, and any contingencies. The most common contingencies include the buyers ability to obtain financing and the home inspections that they would like to perform. These include home, pest, radon, well, mold, lead paint and possibly others.

The typical amount you almost always see for initial consideration on a Massachusetts offer form is $500-$1000. When the buyer signs the purchase and sale agreement the buyer will typically put a balance of 5% in escrow. Although this is the amount you see most often, a deposit is always open for negotiations. Sometimes a buyer might not quite have the 5% to put down.

Breaking a Real Estate contract as a buyer

Most of the time the person that wants to get out of a Real Estate contract is the buyer. There could be any number of reasons why a buyer would wish to terminate a contract from general home inspection issues, to the discovery of mold or radon, or some other unforeseen problem with a property.

If the buyer has a contingency within the contract for the reason they wish to terminate then there is no issue and the buyer will receive their deposit back in full.  There is always the possibility that a buyer could try to back out of a Real Estate contract after all their contingency dates have lapsed. In this case the seller would be entitled to keep the money that is in escrow. It is possible that the seller could sue the buyer for damages but in my experience most of the Real Estate contracts that I have seem limit the sellers damages to the deposit amount.

Breaking a Real Estate contract as a seller

What about the seller backing out of a contract? This is a question that I often have to educate my seller clients on. There are many folks who do not realize that an offer to purchase Real Estate in Massachusetts is a BINDING contract. This means that a buyer could sue you for performance and force you to sell your home.

Sometimes sellers can get remorse and feel like they no longer want to sell after they have signed a contract with a buyer. There could be any number of reasons for this happening. Maybe the house the seller wanted to purchase is no longer available or some kind of heath issue crops up with one of the parties that makes selling not an easy task. There could be an endless amount of reasons.

Getting out of a Massachusetts Purchase and sale

What do you do if you are selling your home, have a signed contract and feel that you want to break the contract? The 1st thing you would want to do is make your listing agent aware of the situation and have them get in touch with the buyers agent.

As a seller you are probably going to feel like you are on a stormy island of your own as all the other parties in the transaction are not going to be too happy with your decision.

You can more than likely expect the following:

  • Be prepared to release the buyers escrow money to them with any accumulated interest.
  • Most buyers will more than likely want to reimbursed for any out of pocket expenses they realized during the transaction. These expenses could include: inspections, mortgage application fees, mortgage lock in fees, attorney expenses, etc.
  • Additional complications could include the expense of interim housing if they have already sold their home and were expecting to move into yours.
  • A change in interest rates could be another complicating factor if rates have risen during the time they were under contract. Be prepared to buy down their mortgage rate if they ask.

As a seller what you need to remember in this circumstance is that you are breaking a contract. If you really want to remain in your home you need to be as nice as pie to a buyer. The buyer could easily drag you into court to force what is known as “specific performance” where you are not only forced to sell your home but also reimburse the buyer for any of their costs associated with this mess.

Obviously the best case scenario would be a very understanding buyer who lets you excuse yourself from the contract. Not every buyer is going to be so kind. If you find yourself in this kind of situation a competent Real Estate attorney would be a must! A Real Estate attorney would be able to negotiate the best possible settlement with the buyers or their lawyer.

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About the author: The above Real Estate information on breaking a Massachusetts Real Estate contract was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Upton, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.


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