We were closing on our house; the buyer signed closing documents, then our Realtor told us not to go to title company, because the buyer's soon-to-be-ex-wife would not sign a document. We didn't know she existed until last Friday as she isn't on contract, HUD, etc.. . She went to title company and told them she would sign, took documents to her attorney and has decided she now wants to renegotiate their custody agreement and will not sign. We have learned she was agreeing to sign the document for 2 months, but at closing day, she changed her mind. We have now lost the buyer, we also lost prime moving season (Summer), we were getting funding from HAP (program from military to help offset loss), title company has to send back $88,000 check to HAP, we will have redo HAP qualification process (which takes 30 days) and if programs runs out of funds we won't get it again, buyer was renting and has to move out, so we will have to pay another mortgage payment. My question is, can she be held liable or is there any recourse against her for her continuing to agree verbally to everyone she would sign document and not doing so on closing day?

You need to read the contract you have with the buyer. That contract will detail what penalties you can pursue against the buyer in case of default. If the wife did not sign the contract she is not a party to the deal and I don't think you have a case against her. But you may have a case against the buyer depending on the terms of the contract.

There definitely should be some penalities against the buyer. But what they are depends on what the contract says. Did you have an attorney representing you? If not, I would consult one.

Except that the buyer didn't refuse to sign; his wife did.

And I question whether OP can sue anyone if OP didn't go to the closing. It could be that a court would find that OP, not the buyer, breached.

I am not sure why the realtor advised OP not to sign. Possibly the realtor is liable.

I took the OP's story that the buyer refused to complete the closing because the ex refused to sign. But I can see your interpretation. If, in fact the OP backed out of the closing then he may have no recourse and could be sued by the buyer.

The ex wife is no part of the contract, your contract is between the "buyer" and yourself. If the buyer refused to close then he is liable to you for any and everything that the contract allows you to get for failure to close.

The buyer could have closed, but he would have had to deal with this house in the divorce, since she was not a ex wife.

If this was asked in the contract papers, and he lied, there may be further issues

Thanks for all the inputs. We, the seller, did not refuse to close. We were told, the buyer could not complete closing until his soon-to-be-ex-wife signed the deed/note (not sure which). Therefore, we could not close unless she would sign the documents she had agreed to sign prior to closing. She had agreed to go in separately and sign, which did happen. He signed at his closing time, then she went in at her appointment time to sign and backout as soon as she got the papers and took them to her attorney. It seems as if she was agreeing to sign, just to get a copy of the papers to use it as leverage and try to renegotiate their custody agreement.