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Kentwood Real Estate City Properties
SHERRI WHEELER, Kentwood Real Estate City PropertiesPhone: (303) 345-3303
Email: [email protected]

Legal Reasons to Back Out of a Real Estate Purchase Contract

by SHERRI WHEELER 01/05/2020

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

SHERRI WHEELER

Sherri Wheeler is a full time professional broker with a reputation for her commitment to high standards, professional ethics, diligence and results. She represents buyers and sellers throughout the Denver Metro area at every price range. Sherri is also a Relocation Specialist.

Outstanding client service is the hallmark of Sherri's transactions. She pays meticulous attention to each detail and demands perfection at every phase of the transaction. Her experience and market knowledge are invaluable whether representing a buyer or a seller. When preparing a property for sale, Sherri brings sophisticated marketing strategies to the table and executes flawlessly. Her skills at negotiation are without equal. Clients are so impressed and pleased with Sherri that most of her business is based on referrals and repeat clients.

The purchase or sale of a home is one of life's most momentous events. Sherri understands her job is to help her client's dreams come true. She is driven to exceed their expectations and the client's needs always come first.

Sherri's genuine desire to be involved in the Denver community is most evident through her ongoing commitments to the Colorado Association of Realtors, National Association of Realtors, Denver Chamber of Commerce, Downtown Denver Partnership, Habitat for Humanity Judi's House, and especially close to her heart is Kids in Need of Dentistry.Sherri Wheeler is a full time professional broker with a reputation for her commitment to high standards, professional ethics, diligence and results. She represents buyers and sellers throughout the Denver Metro area at every price range.