What is the legal implication when a house seller cancel the deal after earnest deposit is paid & buyer has already sign the S&P? Real scenario.
Based on the brief facts provided we assume that:

  1. the buyer and seller have agreed to the sale and purchase transaction via Offer to Purchase whereupon buyer paid the earnest deposit; and
  2. the buyer has signed the sale and purchase agreement and the seller has not signed the same.

On the above premises, the legal implication on cancellation of transaction lies upon the provisions of the Offer to Purchase. In market norm, if seller’s cancellation is due to fault or delay of the buyer, the seller shall be entitled to forfeit the earnest deposit and terminate the Offer to Purchase.

On other hands, if the seller’s cancellation is due to no fault or delay of the buyer, the buyer shall be entitled to full refund of the earnest deposit and on top a sum equivalent to the earnest deposit as liquidated damages.

Alternatively, the buyer may remedy of specific performance in the court to force the seller to complete the sale and purchase transaction as agreed.