The Basics of Cancelling a Purchase Agreement

Whenever you enter any sort of agreement, it’s best to find out an exit point before you even go in. When buying a house, knowing about what the limitations are when it comes to cancelling the purchase agreement is essential because in the process of buying real estate property, a lot of things can happen. You can’t always expect that the home buying process will go smoothly from day one until the day you move in. There will be changes, there will be things that can influence your decision and make you change your mind.

For example, if you’re looking at Coronado homes for sale and you start working with a real estate agent to get a particular Coronado real estate property, you don’t know what would change your situation in the future. It could be issues with the lender, issues with the house itself, or some changes in your personal situation. Imagine what financial burden it would be to be saddled with a mortgage when your financial situation has changed. On the other hand, not honoring the purchase agreement could get you into some legal trouble.

When buying a house, the document that binds you to certain legal obligations is the purchase agreement. Before you sign it, ask your real estate agent if you can be released from the agreement for any reason, and ask that it be put in writing. If the agent tells you that you can’t cancel, look for a different agent. Consult the broker of the agent and check whether it’s really their company policy that there’s no acceptable reason to cancel a purchase agreement.

Before signing a purchase agreement, it’s best to read it thoroughly, especially the cancellation clauses. You can set contingencies in the purchase contract, if the seller will agree to it. Some buyers include contingencies like they will only complete the purchase if the appraisal of the property reaches a certain amount, or if they are able to sell their first house at a certain price and within a certain timeframe, or that the seller first completes specific repairs that they agree should be done before the purchase of the house.

Some states require that inspections are completed before you sign a purchase agreement so that after you have the house inspected and then you sign the contract, it will already be considered binding. Some states require that you sign the contract first before you have the house inspected. Should the inspection report come back with some things that you’d consider deal breakers, then your deposit money should be returned to you, but only after the inspection report comes back.

In some states, the default period for inspections to be completed is 17 days. However, if you have contingencies in place, they will remain intact even after the 17 days have passed. In other words, you can still extend the 17 days and not cancel the purchase agreement, until the seller objects to the length of time you’re keeping his property off the market.

Once the seller objects, he issues a Notice to Perform, which means that you are called to action, usually within 24 to 72 hours so as not to hold up the property too long. If you don’t remove the contingencies of the contract within the seller’s specified time, then the seller can back out of the purchase agreement.