What happens if I back out of a real estate purchase agreement due?
How this type of scenario shakes out depends entirely upon how the purchase and sale agreement is written. You may have seen or heard of the term time is of the essence. It comes into play here. Particularly in residential real estate transactions. There aren typically a number of contingencies written into the contract for things such as inspections, appraisals, financial qualifications etc. Each contingency will have a separate deadline. The buyer will also have most likely paid a good faith or earnest money deposit which is being held in escrow by a third party. If the buyer wishes to withdraw due to an issue with one of the contingency items before that contingency deadline arrives they may usually do so and receive a refund of their deposit. Proper notice (per the contract) must be given to the seller before the contingency deadline. Most contracts will require a loan denial letter from a lender in order to terminate a purchase agreement without penalty and again the date is critical. The process of purchasing real estate has a lot of moving parts and critical deadlines which if why the assistance of an agent or broker (preferably a Realtor) can be of immense value. Over the years I have seen a number of people learn the meaning of time is of the essence the hard way and it is not pleasant to see. Even when my client benefitted from the situation.