How do I handle a failed closing?
What now? Closing fell through — here’s the fast plan that saves your deal and your deposit
Quick reality: a failed closing is fixable
A closing can fail for many reasons: financing collapse, inspection surprises, title issues, missing documents, or last-minute buyer/seller cold feet. The moment it happens, the outcome depends on two things: the contract language and the speed of your response.
Immediate steps to protect yourself
- Stay calm and act fast — emotions cost money. Document every message, email, and call. Time-stamped records matter for disputes and claims.
- Review the purchase agreement and contingencies. Look for financing, inspection, title, and closing-date clauses. These control whether a party can legally walk away.
- Notify your agent and your lawyer right away. Don’t negotiate alone. A realtor and real estate lawyer know the exact paperwork and legal remedies.
- Preserve the deposit (earnest money). Contact the escrow/title company. If the deposit is at risk, get instructions on how to request or dispute release.
Practical recovery options
- Cure the breach: If the problem is fixable (repair, new financing proof, corrected document), ask for a short extension. Most parties prefer a small extension over litigation.
- Use contingencies: If a contingency isn’t met (e.g., financing fell through), the contract may allow termination with deposit return. Follow the notice and timelines precisely.
- Negotiate a compromise: Sometimes a price adjustment, credit, or repair saves the deal. Put any compromise in writing and amend the agreement.
- Enforce or defend: If the other party unjustifiably refused to close, you may have legal options like suing for specific performance or damages. This requires a lawyer.
Legal paperwork and termination steps
- Serve written notices exactly as the contract requires. Oral agreements won’t protect your money.
- Use standard release or mutual termination forms if both sides agree to walk away.
- If claiming breach, prepare demand letters with documented losses and a deadline before filing a claim.
- Keep every receipt and invoice. Mitigation of damages is often required by courts.
How to reduce risk on the next deal
- Build clear financing and inspection deadlines into the contract.
- Include walkaway protections and clear notice windows.
- Use escrow instructions that protect earnest money based on objective triggers.
- Work with experienced local pros who know how local courts and title companies behave.
Why you want an expert on your side
One misstep in paperwork or timing can cost six figures or months in court. A local realtor who handles failed closings regularly knows which clauses win, how to lock down deposits, and when to escalate to a lawyer.
If you’re facing a failed closing now, get crisp, practical help. Contact Tony Sousa — local realtor who handles legal & paperwork issues and rescue closings. Email: tony@sousasells.ca | Phone: 416-477-2620 | https://www.sousasells.ca
