We live in North Carolina.
We signed a "Offer to Contract and Purchase" a house mid July. We had it inspected and found several smaller issues and a couple bigger ones too. The inspection identified a cut double floor joist and a drainage issue on both sides of the house. Our agent put together a "Request for Repairs" agreement and we signed it. The "Repair Agreement" indicates we give up our rights on the "Repair Contingency" if both parties agree to the "Repair Agreement". The owners did not sign but attached an addendum and signed it to repair 4 small issues and forward the remaining 15 items to the original builder for review. They made no commitment on the remaining 15. We never signed the addendum but did not communicate refusal. Here's my question. We scheduled our inspector to review the corrections the sellers made 1 week before closing. This gave them 1 month to complete. When the follow-up inspection was performed, the inspector found the drainage issue was not corrected and the double floor joist had not been not fixed in a manner that would pass code. We then hired a landscaper to examine the lot for the drainage issue and write an estimate for the cost of remediation. His estimate was for $3580. My repair contingency in the contract was $3000. Unfortunately we couldn't find someone to estimate the structural issue in a timely manner and the clock was running down

Item 11 on the owners "Resident Disclosure Statement" - Problems with Drainage, Grading or Soil Stability of Lot is marked as "No" by the owners.

I retained an Attorney and we terminated the contract based on a repair estimate exceeding the $3000.00 contingency two days before closing.

The owners refuse to return the earnest money and are now threating a law suit for breach of Contract. They claim they have expenses in excess of $10,000. Can you help me? Do they have a case? Thoughts please?