Forrest and JoAnn Forman are suing John D. and Katherine McMahan after the McMahans decided not to buy a home from the Formans.
The Chancery Court complaint says on Feb. 27 the McMahans signed a purchase agreement to pay $895,000 for the house at 1707 Golf St. in Chattanooga.
They paid a $10,000 deposit.
Closing was set for May 1.
The suit says the McMahans had an inspection of the house made on March 11 and did not inform the Formans of anything that needed to be repaired or replaced.
It says Howard Bickerstaff, agent for the McMahans, notified the Formans on April 10 they would not buy the house.
Mr. Forman said he appeared at the scheduled closing, but the McMahans did not show up.
The Formans said they suffered damages including the loss of the contracted sale, expenses in re-listing it, additional mortgage payments and upkeep.
They are asking that the McMahans either be required to pay $895,000 for the house or pay them "any difference between that amount and the amount recovered by the Formans from a subsequent sale to a third party, plus all incidental and consequential damages associated therewith, including attorney fees and court costs."
Attorney Hugh Moore Jr. filed the suit.
Mr. McMahan, who is an attorney, said in a letter that "numerous factors" led to the decision not to buy the house.
He said, "We believe the list of repairs far exceeds the $1,000 allocation. The extent and nature of necessary cosmetic repairs exceeds our initial analysis. Issues have arisen since the contract was signed that simply make it impossible to purchase the home. Kathy will have to explain these issues to JoAnn."
He noted that the $10,000 deposit was being forfeited and said, "I hope you are successful in securing another contract in a short time frame."