What happens when my chain of closings breaks because one sale in the middle falls through?

Each Agreement of Purchase and Sale in a chain is legally independent, so one sale collapsing does not automatically unwind the transactions on either side of it. The people still able to complete their own purchases and sales are generally still expected to do so, even though the reason their chain existed in the first place has now broken down in the middle.

For the parties directly caught in the middle, the practical fallout usually involves scrambling for short-term funding, since money they were counting on receiving from their own sale has not materialized. Options include bridge financing to cover the gap, negotiating a brief delay with a cooperative counterparty, or, if nothing can be arranged in time, facing default on their own purchase. Whether any of these are realistic depends heavily on how quickly the problem is identified and how flexible the other parties are willing to be. Because timing is critical once a chain breaks, contacting your lawyer the moment you learn of the problem, rather than waiting to see if it resolves itself, gives you the most options.