Real estate deals aren't done until they close.
It can be hard for a seller to get out of a real estate purchase contract, especially the state-approved forms used by most real estate brokers, because these contracts are usually written to protect the buyer. Still, a seller can back out at certain stages of the contract, especially if they have built in an escape clause in the additional provisions.
Under Normal Circumstances
Assume that a contract has been accepted by both the buyer and you, the seller, and now you are having second thoughts about selling. In many states there is a three-day attorney review period during which either party can back out of the contract. If your state does not have this period, your first opportunity to bail out is to contact the buyer or their buyer's agent, in writing, and explain that circumstances have changed, and you no longer wish to sell and you will promptly return their earnest money. It is up to the buyer to agree to terminate the contract, but they are within their rights not to agree to terminate. The next opportunity for the seller to back out is to refuse to make any repairs based on the inspection report. If the buyer is unhappy with this decision, they may chose to terminate the contract. The next opportunity to terminate the contract is the loan commitment deadline. If the buyer does not provide proof of a loan commitment by this pre-determined date, the seller can pull the plug.
Seller Contengency Clauses
Include one or more "contingency" clauses into the contract, such as, "The sale is contingent upon the seller locating a replacement property and having a signed contract by (name a date)." These clauses are sometimes called "weasel" clauses because they allow either the buyer or seller a way out of the contract if a specific event does not happen by a specific date. Anything, no matter how frivolous, can be the basis of a contingency clause as long as both sides agree to the additional provision in the signed contract. It is important that the event have a deadline. Examples of contingency clauses include a well or sewer inspection, special financing, the seller being accepted for a job, or for that matter the seller losing twenty pounds ten days before the closing.
Worst-Case Scenario
Understand that a buyer's penalty for not performing according to the contract is normally "liquidated damages," meaning that they lose their earnest money, while the seller's penalty for failing to perform is normally "specific performance," meaning that they are bound to act according to the contract, or face arbitration or a lawsuit. In a worst-case scenario, or as a last-ditch effort, the seller can attempt to buy their way out of the contract. How much this will cost the seller depends upon how well they can negotiate.
Tags: terminate contract, according contract, agree terminate, buyer seller, contingency clauses, contract especially
