How to cancel a Real Estate Contract

By
Real Estate Broker/Owner with Buyers Broker of Florida
https://activerain.com/droplet/9Z4

How to cancel a Real Estate Contract.

Are you all tied up in a purchase contract that is a mistake? What can you do?

First of all, it is always better to protect yourself in your Real Estate offer with contingencies than to try to untie yourself from a contract after you are knotted up to with no escape route...not that I think you should go to contract if you have reservations. If in doubt, do not sign.

But here are some strategies for cancelling a contract that you could use:

Contract contingencies are simply a way a buyer can back out of a contract within a set period of time if certain conditions specified are not met in a timely manner.

Home Inspections: Make the contract subject to approval of your house inspections and do not box yourself into a tight time frame...give yourself at least 15 days to inspect for anything and everything you want. If unsatisfactory to you, you may have the option to void the real estate contract as long as you are within the time frame indicated.

Mortgage Financing: If you do not qualify for a mortgage under the terms specified under the contract, you may be able to cancel the contract, but expect to provide proof. You should not need to seek alternate financing.

Appraisal: Even if you are paying cash, make the contract subject to the appraised value being equal to or more than the purchase price. Do the appraisal after the home inspection and after you have your financing scrutinized.

Attorney Review: Make the contract contingent on your attorneys approval. If your are stuck, discuss with your attorney.

More Escapes: Last but not least, did the seller perform in a timely manner per the contract? Did everyone sign and initial all the changes? Does the title have clouds? Were there non-disclosed HOA capital contributions? Are there encroachments on the property? Did the seller hide some defects? These are all issues that could allow a buyer to cancel the contract.

No one can force a buyer to close on a property, but depending upon how the real estate contract was written and the buyers performance, the seller may be entitled to keep your deposit. If you are serious about voiding a contract, it is always advisable to seek a legal opinion from a real estate attorney.

Copyright @ Buyers Broker of Florida 2011 "How to Cancel a Real Estate Contract"

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 Eve Alexander Orlando Buyers Agent

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Winston Heverly 12/19/2014 01:15 PM
Topic:
Home Buying
Location:
Florida Orange County Orlando
Groups:
Luxury Real Estate
Tags:
cancel real estate contract
voiding a real estate contract

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Ambassador
664,846
John DL Arendsen
CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS - Leucadia, CA
Crest Backyard Homes "ADU" dealer & Contractor

A well written contract should be the number one priority for a buyer's agent. If they don't have their clients back who does?

May 29, 2014 12:34 AM #27
Rainer
38,260
Kunni Biener
First Class Title, Inc. - Rockville, MD

as for #20, the question about the death certificates, the deceased had to have been buried or cremated, has anyone contacted the funeral home? or looked for an old newspaper notice? Unfortunately, we attorneys do need to know that "dead" guys are really dead!  If it was back in the chain, did the current owner have title insurance? then that company should indemnify. If it is the current seller, that person has some connection with the deceased, as PR or heir, that should allow them to get death certificates from the state.

May 29, 2014 12:35 AM #28
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

It's really not that easy for a seller to keep an earnest money deposit in California. Some sellers may be delusional in thinking it's a way to make some extra cash if a buyer decides not to buy. It's like a judge told me once, no one can make a buyer buy a home or an owner sell one. If a buyer decides not to sign the escrow release, then what? Seller can't sell and will have to pursue the deposit in arbitration. Good luck with that.

May 29, 2014 01:11 AM #29
Rainer
88,497
Jack Fleming
Weichert, Realtors - Wayne, PA

I recently had to get a buyer out of a contract. It was not pretty. They could not close because the home they were selling fell out of contract. This was after spending the money for inspections, appraisal and the mortgage application.

Somehow they convinced themselves I should repay them out of my pocket. They can take it out of the commission I lost when they lost the deal.

May 29, 2014 01:21 AM #30
Rainer
136,469
Jamie King
Hoty Enterprises, Inc. - Huron, OH
Sandusky, OH

Had a buyer back out of closing on a home 4 days before closing and he WAS a real estate attorney with the US Coast Guard! Imagine that!

All contingencies met, no issues from inspection, loan approved, appt set to close. Turns out he put in for a transfer (told no one), transfer was granted and that was his excuse for walking away. Sellers rec'd earnest money deposit, but it cost them additional hardship. By contract they had 4 days to deliver possession and were moving out of state, so the wheels were already in motion to make the interstate move. Stuck with 2 homes, 2 property taxes, 2 homeowners insurance policies, 2 sets of utilities, and had to hire someone for lawn maintenance. They could have sued for damages, but luckily I found a cash buyer within a week that bought it for more than asking price. Sellers settled for just the earnest money.

May 29, 2014 02:23 AM #31
Rainmaker
526,059
Mike & Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

 

Eileen:  Yes, timelines are always important.

John: That's for sure.

Kunni: Excellent points

Pamela:  If escrow is with a title company they do not have to follow the rules of arbitration.  They can just release the funds and hope the other party does not sue.

Jack:  Of course you should have paid...look at all the commission you got .  Sure, just blame the agent.

Jamie:  Hard to imagine. Real bummer for the sellers, but I have found that most contracts today consider the escrow as liquidated damages.  Good thing for them that they had you to pull it together with a new buyer.

May 29, 2014 03:03 AM #32
Rainer
471,039
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

How many sellers would accept an offer with every listed contingency? Today's market commands that buyers are already approved for a loan so why would a contingency be required in the contract? Buying "as is" is another issue, so inspection, repairs and appraisal issues shouldn't be a contingency either, so it really depends on the terms and conditions of the sale, doesn't it?

 

May 29, 2014 03:25 AM #33
Rainmaker
526,059
Mike & Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

Kimo:  It would probably not be prudent for a seller to accept every contingency in a contact, but they sure do accept some.

Buying a property "AS-IS" only means that the seller does not want to make repairs, it does not mean that there is no inspection contingency.

Buyers are only Pre-Approved for a loan.  A true approval only comes after the buyer is under contract for a specific property, the property appraises for purchase price and the underwriter approves the file.

Depending upon what is important to the home buyer, contingencies are not dead and there is at least one in every offer.

May 29, 2014 03:44 AM #34
Ambassador
1,549,703
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I like this, I think it's reassuring to buyers to know that if they really want out, there are ways to make that happen.

May 29, 2014 06:14 AM #35
Rainmaker
1,013,421
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Whenever possible, I try to submit contracts with no contingencies at all - other than a clear title.  So many of these weasel clauses end up causing your contract to get rejected.  A buyer can actually get sued for specific performance or damages above and beyond a deposit.  But that seldom happens on small residential deals because the cost involved is not worth it.  

May 29, 2014 06:59 AM #36
Rainmaker
1,431,110
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Exactly use the contingency.  I have never lost a deposit for a client.  In California the limit of damages is generally speaking the deposit and even then the seller has to document they lost money by a buyer backing out.  

May 29, 2014 07:56 AM #37
Rainmaker
526,059
Mike & Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

 

 

Karen:  Where there is a will, there is always a way...

Rob:  The Florida FarBar contract was revised last year and if a buyer defaults and the seller agrees to keep escrow deposit, that is considered liquidated damages. Of course anyone can sue...

Gene:  I used to keep an escrow account years ago, and there were always demands on the buyers escrow.  I never lost a deposit, but had to negotiate with angry sellers.

May 29, 2014 09:01 AM #38
Rainer
59,015
Aaron Jay
City of Trees Realty - Chico, CA
-Keepin' it Real...Estate!-

Good reminder post. Contingencies, Contingencies, Contingencies.

May 29, 2014 10:34 AM #39
Rainmaker
624,223
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

I would recommend to my client to not accept a contract from a Buyer who has a clause in it that the contract needs Attorney approval....that should already have been done if needed. If it was in there...it would need to have 48 hours or less for that contingency to fall off.  

May 29, 2014 11:53 PM #40
Rainmaker
1,558,040
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

# 33'scomments are ridiculous!  He's saying buyers should just take the house - defects and all the rest of the things sellers know about and are trying to hide!  And, for the generosity of the sellers even taking the time to put their precious signatures on the contract, they'll up the price by $25,000.  

May 30, 2014 02:25 AM #41
Rainmaker
1,057,302
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Contracts are complex documents that protect both buyer and seller.  Working with a knowledgeable agent and title company is essential.

May 31, 2014 03:01 PM #42
Rainmaker
797,159
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

There are some contingencies already built into our Arizona purchase contract. A good buyers agent should be able to explain what the buyer is getting into prior to writing the contract. Like Sharon (#42) said, there are things within a contract to protect both the buyer and seller.

Jun 01, 2014 11:35 AM #43
Rainer
133,134
Deleted Account
Fort Myers, FL

This is great news for the buyers, but not really for the sellers.  I have been asked many sellers, "why is it like that?"  The answer is a rather simple one, the seller knows everything about the home and really has no surprises, but the buyer initially knows nothing about the home, which may have a lot of surprises.  Bottom line is if the seller discloses everything, there should be no problems with closing.

I understand what Kimo is saying, but if the home is being sold "as-is," that is all the more reason to have the contingencies in there.  All "as-is" means is most likely the seller will make no repairs.  The potential buyer will want to know what is all wrong with it and know how much money they will have to spend to get it repaired to see if it is worth it.

Jun 02, 2014 10:32 AM #44
Rainmaker
108,749
Brian Olsen
Portland, Lake Oswego, West Linn & Dunthorpe Neighborhoods, Waterfront, Luxury & Floating Homes - Lake Oswego, OR
Cooper Jacobs Real Estate Group | Keller Williams

I want to send this BLOG on and on and on! Great information on a a common issue.

Have a fantastic week Mike & Eve.

Jun 02, 2014 03:43 PM #45
Rainmaker
725,230
Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

There are always ways out for the California buyers, from contingencies to some legal tricks of the trade to make certain they receive their EMD.

Dec 19, 2014 01:23 PM #46
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