You searched far and wide for the right home and thought for sure you’d hit the nail on the head. But now, your feet are cold and you’ve changed your mind. You don’t want to go through with the purchase. But, you’re concerned about getting out of the contract. After all, the seller accepted your purchase offer and it’s now a legally binding agreement. How could everything change so fast? Just a couple of week ago, you were feverishly wondering how to reduce your closing costs to save a little money to buy those little housewarming extras. But, it’s just not in the cards and you need to know some ways to back out of buying a house.

Ways to Back Out of Buying a House

If you’re worried about exiting the deal, it’s probably due to a couple of reasons. First and foremost, you don’t want to lose your earnest money deposit. That good faith deposit you made it’s exactly pocket change and you need that money, anyway. Another possible scenario is you’ll get sued by the seller. Although it’s not pleasant to think about, this possibility does exist. Generally, a seller or even a buyer) can sue the other party for breach of contract and/or what’s known as “specific performance.”

“Residential purchase contracts typically list opportunities in which you can cancel the deal. Specific reasons for cancelling include an inability to get a loan or a dissatisfaction with the property’s condition. Even if you have no technical right to back out of the contract, you may be able to cancel the deal and get your earnest money, or good-faith deposit, back.” —San Francisco Gate

In practically every residential real estate contract, there’s a specific performance clause. And, unlike some other kinds of legalese, this isn’t difficult to understand. It means precisely what it states — the seller and buyer are to perform specific responsibilities, otherwise, that party is out of legal compliance. So, if you really want to get out of a residential real estate transaction as a buyer, you’ll need to go through that contract. Here are some ways to back out of buying a house which might be available:

• Issues found during an inspection. Generally, buyers have a home inspection, pest inspection, four-point inspection, and wind mitigation inspection conducted to learn about the condition of a house. These inspections represent contingency clauses in the purchase contract. So, if pests are found, unpermitted work is discovered, material defects are revealed, or any other problems, this is a legal out and it lets you take you earnest money deposit back.
• You haven’t sold your current home. Another contingency usually included with a purchase contract is the need for the buyer to sell before the purchase is finalized. Depending on the timing, you might be able to use this contingency to exit the contract and walk away with your good faith deposit.
• The seller didn’t make agreed repairs. Here again, the contract comes into play (as it does with all of these possibilities). If the seller agreed to make certain repairs and/or replace something like the HVAC system but failed to do so, you don’t have to go through with the deal and keep your deposit.
• You are unable to obtain financing and/or insurance. Here in the state of Florida, tropical weather events happen every year. So, lenders require you have adequate insurance coverage to approve financing. What’s more, if you lose your job, experience an income reduction, or something else, all of these are possible outs.
• The HOA CC&Rs (a.k.a. homeowner association rules). If you are buying a house in a HOA community, you’ll receive the CC&Rs or Declaration of Covenants, Conditions, and Restrictions. You have a specific number of days to review this documentation. Should you discover one or more rules you object to, that’s another legal reason to cancel the contract.

If you are considering buying a home in Orlando, contact us for the latest market information. We’ll also provide you with the right advice to find a house quickly and for the best price.