Buying or selling a home is a huge decision. There are hundreds of thousands of dollars at stake. If you are the buyer, you may be having buyer’s remorse and don’t feel 100% comfortable spending all that money. If you’re the seller, you may suddenly decide you want to keep the home after all.
It’s not uncommon for people to change their minds about buying or selling a home. Buyers are often more apt to change their minds because they are the ones forking over all the cash. They want to be able to see themselves in the home for many years to come.
So, it is closing day, and you are suddenly having cold feet. You have a bad feeling about this house. You want to back out. But can you? Is it too late to back out of a real estate deal at closing?
You can back out of a real estate deal at closing, but it will not be free to do so. There are financial consequences, depending on the contract terms. If you are the buyer, backing out could mean forfeiting your earnest money deposit. If you are the seller, withdrawing without legal grounds could lead to a lawsuit for breach of contract.
An offer to buy a home becomes a binding contract when both parties sign a purchase and sale agreement. Before signing the agreement, either party may cancel the sale without penalty.
Once both parties sign the purchase and sale agreement, a sale can still be canceled, but there will be penalties unless a contingency in the deal has not been met. That is because you are breaking the contract. You would, at a minimum, forfeit any earnest money you put down on the home. However, it is possible the seller could also take you to court.
As a buyer, you can back out of the deal at closing and even after signing the contract, but you will lose money. Sellers also face consequences for backing out of the contract. If a seller backs out, the buyer could sue for breach of contract, and the seller may also be forced to return the buyer’s earnest money.
Buyers should negotiate as many contingencies as possible to avoid penalties. However, sellers do not like many contingencies, so tread carefully.
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You can back out of a real estate deal at or before closing, but it is not ideal. It will more than likely come with costs to you unless you can prove that a contingency was not met.
At Blackacre Law, LLC, we understand that a home is a major financial purchase. Our South Carolina real estate attorneys will guide you through the process with ease. We will answer all your questions to help ensure you are making the right decision. To schedule a consultation today, call our office at (864) 775-5400.