Real Estate Contracts: Reasons for Backing Out

by Camara Realty, LLC 03/08/2020

Photo by Gerd Altmann via Pixabay

Once you sign a purchase agreement, whether you are the buyer or seller, it is very difficult to back out of it. However, as a buyer, you are able to back out if your real estate agent drafts the contract properly. Real estate agents use a standard contract. That does not mean that you have to accept the contract as it is written. You, as a buyer or seller, may make amendments to the contract. If you do make amendments, don’t get so crazy that the other party will file it in the round file.

Exceptions

Almost every real estate contract you see will have exceptions. In most cases, the buyer or seller has to add the exceptions. An exception is a condition that the buyer or seller has to meet. If the buyer or seller cannot meet that condition, the contract gets canceled and the buyer gets their earnest money back. Some examples of exceptions include:

  • Pending the buyer’s ability to obtain financing;

  • Pending a termite inspection;

  • Pending a home inspection; or

  • Pending clear title.

These are the most common exceptions, though buyers and sellers are not limited to only these. As for home inspections, buyers and sellers often negotiate repairs. If the repairs are significant, the buyer may ask the seller to grant a credit or to make the repair to keep the contract. If the seller refuses and the home inspection is listed as an exception, the buyer may back out and get their earnest money back.

Natural Disasters and Accidents

If Mother Nature rips down the house with a tornado or does extensive damage with a hurricane, the buyer may choose to back out of the contract without forfeiting their earnest money. If a fire burns the house down, whether it’s a forest fire or arson, the buyer may back out, as long as the buyer had no hand in the arson crime.

Other reasons a buyer may back out without forfeiting their earnest money include:

  • Flooding;

  • Extensive damage by trespassers;

  • If the buyer finds that the house is full of mold;

  • If the buyer finds that the seller did not disclose that the house had lead paint or asbestos.

Some contracts are written so that the buyer cannot back out because the seller did not disclose lead paint or asbestos. It is up to the buyer to ensure the clause in the contract is written so that they may back out of the contract. In fact, if asbestos or lead paint is a major concern for the buyer and the house is older, they may want to add that as an exception.

Always read real estate contracts carefully, including disclosures made by the seller. Amend the contract with exceptions if you are concerned about anything that may devalue the property.

About the Author
Author

Camara Realty, LLC

I have been in the real estate services business in the Juno Beach, Jupiter, North Palm Beach, Palm Beach Gardens, and Tequesta real estate markets for many successful years and will be here for many more. This longevity and confidence comes from my real estate services to a great many Buyers and Sellers, and their recommendations to others that result in repeat and referral business that keeps me productive and successful.

As a full service Juno Beach, Jupiter, North Palm Beach, Palm Beach Gardens, and Tequesta real estate professional, I work with Buyers, Sellers and Investors in real estate transactions spanning all of the price ranges and property types.

Residential Single Family – My residential single family services connect Buyers with Sellers every day, and I do it with professionalism and a total dedication to my clients. This property type is the majority of my market transactions, but by far not the only one in which I have expertise.

Condominiums – While condominiums are residential, they’re a very different market focus, and I am an expert in evaluating condos and helping Buyers and Sellers to cope with the special financing and homeowner concerns for this property type.

Multi–family – Investors are great clients for me. Multi–family properties are a very unique market. The detailed return on investment and valuation calculations investors need to evaluate properties for rental are second nature to me.
 

Vacant Land – Land is a very special property class. It’s relatively easy to show a gourmet cook a wonderful commercial kitchen in a home and see their eyes light up. It’s more of a challenge to help a Buyer or Seller to realize the potential in a piece of land. I'm the best at it in the Juno Beach, Jupiter, North Palm Beach, Palm Beach Gardens, and Tequesta real estate markets.

Call me at 561-629-3979 or email me to start a discussion of your needs. Or, fill out this quick form and tell me about your property interests and an overview of your needs.