RE/MAX Centre Realtors
Mike Dixon, RE/MAX Centre RealtorsPhone: (215) 353-1882
Email: [email protected]

Reasons to Back Out of Your Contract

by Mike Dixon 03/21/2021

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

Mike Dixon

Meet Michael Dixon: Your Real Estate Agent for Philadelphia and Beyond: With over 19+ years in land survey and development, my knowledge in property details enhances every real estate transaction. Clients choose to work with me because of my ability to negotiate and clearly communicate with all parties in the real estate process, which makes for a successful and personable buying and/or selling experience!