Buyer’s and Seller’s be aware: You can’t back out of an escrow because the direction of the direction the wind is blowing

Many of you working with an agent may be led to believe that you can write an offer on a property and always back out. Be careful. When you write an offer to purchase a property, your cancellation of the contract needs to be in “good faith”. When you purchase a property, the reason for backing out does not need to be disclosed to the seller but if they decide to take the matter further, there needs to be a reason specified and permitted under your contingency period. In the California Residential Purchase Contract (RPA), it states on page 5 of 8, Section 14, A Time Periods: Removal of Contingencies: Cancellation Rights: The following time periods may only be extended, altered, modified or changed by mutual written agreement. Any removal of contingencies or cancellation under this paragraph by either Buyer or Seller must be exercised in good faith and in writing (C.A.R. Form CR or CC). In paragraph 14. B (1) it goes further by outlining the buyer’s contingency periods and terms. I recommend that if you decide to cancel a transaction/escrow, you state it’s because of Paragraph 14.B. However, if the seller decides to exercise his or her right to mediate/arbitrate, you may have to show that cancellation was because there was a bona fide reason and that a contingency was still in place. If you fail to prove this, your earnest money deposit (usually 3% of the transaction) could be lost to the seller. Just remember, when you write an offer on a property, it’s important to decide before you open escrow that you really want the property. Just because a better listing comes up down the street while you're in escrow isn’t a good reason to walk away from a transaction.