How to Get Out of Your Current Real Estate Contract

You have some options if you need to get out of a real estate contract.

A real estate contract is an agreement between two parties regarding the sale, purchase or exchange of a property. When you decide to submit an offer on a home, you must first sign a contract. If the seller accepts your offer, you then put money down, or escrow, on the property. A real estate contract is legally binding. However, if you need to back out, you have multiple options.

Instructions

1. Identify any contingencies in your contract that will allow you to get out of your contract legally. For instance, real estate contracts normally contain a contingency related to your ability to qualify for a mortgage. If you are unable to obtain a mortgage by a certain date, you can cancel the contract.

2. Look for a contingency dealing with inspection results. If you received negative inspection results, such as for mold, radon or lead paint, you can likely get out of the contract legally.

3. Inform the seller in writing as soon as you decide to get out of the real estate contract. If you're working with an agent, inform him of your decision. Be sure to cancel the contract before the contingencies lapse.

4. Explain your situation to the seller. If the contingencies have lapsed, or you don't have a legal basis to break the agreement, you may draw on the seller's sympathy. If the seller agrees to let you out of the agreement, you will likely lose your escrow money.

Tips & Warnings

• Sellers who break the contract without a legal basis are often required to refund the escrow to the buyer, along with any accumulated interest. Reimbursement of temporary housing expenses may also apply.

• If breaking your real estate contract results in a lawsuit, seek the assistance of an experienced real estate attorney, as not all attorneys deal with real estate.

References

• The New York Times: Your Home: Contracts are Hard to Break

Resources

• WRA: Early Termination of Listing Contract