Entering into a real estate contract can be stressful and exciting all at the same time. Why? These contracts might signal the purchase of your first home. They might also signal the sale of your family business. Either way, both parties might want to back
out of the real estate contract they sign with the other party for a host of reasons. Today, we will take a look at the way both parties of a contract can opt out of the agreement, even if signatures have been added, so that you know what to expect as either a buyer or a seller.
Canceling as a Buyer
It is possible for a buyer in a real estate contract to cancel said contract. There is a catch, though, and it is that you need to back out of the contract for a legitimate reason. Buyers of real estate typically provide a chunk of money as good faith when entering into a contract. This money can eventually be put toward your down payment for the property. It can also be returned to the buyer if he or she opts out of the contract. Most real estate contracts include contingencies for canceling the contract. Some of the most common contingencies used include the following:
Not passing a home inspection
Specified time frame to review any homeowner association or condominium association documents
A survey of the property’s title
Failure to acquire financing
Failure to obtain an appraisal that meets your financing needs
For the most part, the two parties typically negotiate these common problems when they crop up during the process, especially when it comes to an appraisal that comes in low or an inspection that does not come back satisfactory. Many buyers will use the document review period or home inspection as a window to back out of the contract with the seller, especially if they have changed their minds about buying the property.
Should you want to cancel the real estate contract and there are not any contingencies in place, you can simply breach the contract. This will come with consequences, as you will lose the deposit you put down on the property as well as any money that you spent on an appraisal, a survey for the title, and the inspection. It is also possible that you could wind up being sued by the seller.
Canceling as a Seller
It is also possible for sellers to back out of real estate contracts if they so choose. Many sellers decide to back out because they have changed their minds about selling the property or because they have found a better offer. Many contracts are written with a clause that specifies a time in which the seller can back out of the contract when a better offer comes along. The seller can also be sued if he or she backs out of the deal and the buyer is still interested.
Speak with an Attorney Today
Have you recently entered into a real estate contract in Wisconsin but want to back out for one reason or another? If so, it is time to speak with an attorney about the
situation so you can protect yourself legally. Contact the team at Moen Sheehan Meyer, Ltd. today to schedule a consultation. Call the office at 608-784-8310 to speak with an attorney.