My parents are being sued for breach of contract on a home purchase. What can I do?

Hmmm - did they just put down a deposit on the house in AR or did they actually pay a huge amount on the house in AR? and how much money this & what is the total on the house build contract?

So when they moved to MS were they legal residents of MS?

What was dad's legal residency at his death? MS? this is going to be important as I bet you can get the house contract debt to be a claim (debt) against his estate. Then look to see what the timeframe for probate is for that state. I've been executrix twice (in TX) and you have 4 years for probate from the time in which letters of testamentary are even presented….and that is a long long time to negotiate within, some creditors will be all bluff, huffy & demanding but if it's a debt of the estate they have to deal with probate which means doing whatever in the legally set time-frame, file the documents properly, present in court and then wait in line to get paid or if not, if not then just too frickin' bad on getting paid.

Mom is a legal resident of what state now? MS, AR, GA?

Does mom have an assets that could be seized or attached, and what state(s) are they in? How much "liquid" money does mom have right now and where is it (like what state is the $ in)? There are options out there especially if you have the where with all to be a stickler for legalese and feel comfortable in a courthouse.

I'm assuming they still own the land where the house burned down, what is the value on the land (look at the tax assessor statement / bill for this and for the land value NOT the improvements value)? Is it still in both their names? Does it really matter if mom were to loose the land?

Was the insurance on the house totally paid, so there is no insurance claim still to be dealt with? I'm assuming the burned down house had no mortgage so all the insurance $ was totally your parents, is that right?

did dad have a life insurance policy and if so, who was the beneficiary and has it been paid out? If it is your mom, she may want to refuse it (if she can) and then it goes to the secondary beneficiary so that it lessens her asset exposure. I didn't know that you can refuse items someone willed to you or had you as beneficiary till I was executrix and sometimes doing this can be quite the thing to do if it causes problems for the heir that they don't need.

and last ?, does mom have any income other than her Social Security?

All I would add is that they would also forfeit the deposit. I agree with not telling mom right now but she may need to know unless you have POA and can instruct the lawyers and it can be setled between the lawyers.

You get an attorney, don't try to settle this yourself. The seller is entitled to recover monetary losses for failure to close. This would include legal fees for hiring the attorney to close the sale, realtor commissions and anything they paid out thinking there would be a closing.

Call an Attorney that specializes in Elder Law...