Can You Back Out of a Real Estate Purchase Before Closing?
Real estate contracts, like any other legal agreements, bind all parties to the conditions agreed to upon signing. But is there any way to get out of a real estate contract before the closing happens?
There are certain contingencies likely to exist in your contract that allow you to back out of the deal. However, you will need to meet a number of requirements before you are able to walk away. Here are some factors to consider:
- Your contract’s stipulations: For a contract to be enforceable, it must be in writing, identify the seller and buyer, and include a description of the property that will change hands. The contract must also include the agreed-upon sale price and signatures of all parties. If any of those contractual elements are missing, you could get out of the contract without issue.
- Earnest money: Shortly after your offer on a property is accepted, you will pay earnest money in an agreed-upon amount listed in the offer. This money is applied to the purchase price at your closing, but until that time is held in a trust. It acts as a sign you intend to go through with the purchase. If you pull away from the contract without a good reason, you will likely forfeit your earnest money. In this situation, you can back out of the deal, but it will cost you something.
- Deal breakers: There may be certain deal breakers built into your contract to protect each party. Examples would include the buyer’s inability to secure financing, the appraised value of the home being less than the agreed-upon purchase price, unforeseen damage to the home (such as termite infestations or structural integrity issues) or the seller not having a clear title.
- Mutual agreement: If both parties agree to cancel the contract, the seller may choose to either return or split the earnest money with the buyer. In most cases, sellers want to get the property listed for sale again as soon as possible, so they will not try to fight buyers who no longer have any intention of purchasing.
Contact our dedicated legal team in Charlottesville today
To learn more about how you can back out of a real estate purchase before closing, meet with a central Virginia real estate lawyer at Miller Law Group, PC.