When a contract is canceled on the buyer’s side
Real estate contracts vary by jurisdiction, and most have contingencies that will ultimately allow for either buyer or seller to cancel under those particular circumstances. Buyers have to provide earnest money when they make an offer on a property, which is credited towards the down payment — or returned if the. the contract is canceled and the terms to cancel are met. Contingencies are set up and placed on a timeline, and if they’re not met by. a specific date, the buyer can walk away with their earnest money. If a buyer breaks the contract and those cancel terms are not met, however, they run the risk of losing their deposit.
Examples of Contingencies
- condominium and HOA document review time
- home inspections
- appraisal where the lender will not finance the appraised value
- buyer is unable to secure a loan or alternative financing
- title survey
Breaking your contract
You can breach your contract if you don’t have contingencies and you still want out of the contract. You will likely lose the deposit and run the risk of being sued by the seller for breaching the contract.
When a contract is canceled on the seller’s side
If you have changed your mind about selling your home — depending on how the contract was negotiated — you may have an opportunity to opt-out. Some real estate contracts include an escape clause that allows the seller to accept a better offer if one comes in during a specified time period. If you change your mind and decide to decline to sell your home — and you don’t have a kick-out clause — you run the chance of being sued by the buyers.
If you have any questions about your real estate contract contact ARK Attorneys today. 312.753.3142