As a potential buyer, an unanticipated turn of events can trigger an emotional turmoil, making you reconsider the purchase of a property. Despite all the due diligence, inspections, and negotiations, you may find yourself in a contract that no longer suits your needs or preferences. In such cases, walking away from a real estate contract may be a viable option.
Understanding the Terminology
Before we delve into the best way to walk away from a real estate contract, it is essential to understand specific jargon typically used in the process.
1. Contingency: A contingency is a provision in the contract stating that certain conditions must be met before proceeding with the transaction. This includes inspections, financing, or other contingencies.
2. Earnest money: This is a deposit paid by the buyer to the seller or real estate agent to show their commitment to the property.
3. Liquidated damages: These are damages that are predetermined in the contract in the event of a breach.
Reasons for Walking Away
The reasons for walking away from a real estate contract may vary but could include:
1. Discovering significant issues with the property during the inspection that the seller is not willing to fix.
2. Not qualifying for financing or not enough funds to close the deal.
3. Changes in personal circumstances that make it impossible to commit to the contract, such as a job loss or major life event.
4. Discovering a better property or deal elsewhere.
Steps to Walking Away From a Real Estate Contract
If you find yourself in a situation where you need to walk away from a real estate contract, follow these steps:
1. Review the contract: Review the contract thoroughly and identify the contingencies that have not been met.
2. Notify the seller: Notify the seller or their agent of your intention to walk away, stating the reason why. It is best to do this in writing for documentation purposes.
3. Request for release: If there are no contingencies, request for release from the contract. If there are contingencies, ensure that they are not waived before requesting release.
4. Ask for the return of earnest money: If you have put down earnest money, request for its return in writing.
5. Negotiate with the seller: If the seller is not willing to release you from the contract, try to negotiate with them. However, be prepared to forfeit your earnest money.
6. Consult a lawyer: If the negotiations are unsuccessful, or you are unsure of the legal implications, consult a lawyer.
Walking away from a real estate contract can be a difficult decision, but it is sometimes necessary to protect your interests. Ensure that you fully understand the contract and your rights before signing. Remember, walking away from a contract may have legal and financial implications, so it is best to seek professional advice before taking any drastic steps.