Q: We accepted an offer to sell our home in January for $210,000. The buyer had a certificate from a bank that said he was qualified to borrow up to $220,000, which would be more than enough to complete the transaction. Last week, the buyer notified us that he is canceling the sale because the bank will no longer give him the loan that he was promised. Can we sue the buyer or bank for misrepresentation or fraud?

A: You could sue both the buyer and the bank for misrepresentation or anything else you wish, but you probably would not win.

Savvy buyers always get “preapproved” for a loan. The lender they choose typically issues a letter, certificate or card that says they’re able to borrow a certain amount of money – in this case, $220,000.

If you read the fine print, however, you’ll see that most preapproval documents or cards specifically say that the lender is not obligated to issue a mortgage for the stated amount. Banks can cancel a preapproved mortgage for any number of reasons, ranging from a below-market appraisal to even the most modest of downgrades to the loan applicant’s credit rating.

Your letter doesn’t state why the bank suddenly yanked the buyer’s loan approval. But assuming that the purchase offer you accepted includes a standard contingency stating that the buyer isn’t obligated to complete the transaction if he can’t get suitable financing, you have little choice but to terminate the deal and return his deposit.

Filing a lawsuit against the buyer would likely be both time-consuming and fruitless, unless you could show that he purposely set out to defraud either you or the bank. Filing suit against the lender would be an even bigger longshot, for its highly paid lawyers would surely be able to prove that the bank had a good reason to cancel the applicant’s earlier loan approval and therefore cannot be held liable for the home sale that fell apart.

I’m sorry, but your best move now would be to agree to terminate the sale, return the buyer’s deposit and put your home back on the market. It might be a hassle, but it’s a better alternative than tying your property up for months by filing a costly and time-consuming lawsuit that you almost certainly will not win.

¢ David W. Myers is a 20-year veteran of the newspaper and magazine business, having previously covered real estate for the Los Angeles Times and Investor’s Business Daily.