Although we don't see this too often, backing out of a home purchase deal that is possible in some instances. However, it's not without consequences.
This article gives you a general idea of what to expect should you cancel your home purchase agreement after it's accepted. However, it should not take the place of professional legal advice.
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After you sign the home purchase agreement, you are legally bound to the terms of the contract, including putting down a deposit called "earnest money." Earnest money assures the seller that you are committed to following through on the home purchase.
There will, however, be contingencies in place that allow for you to legally change your mind about buying the home even after the earnest money is deposited in an escrow account.
Like we mentioned, changing your mind after signing on the dotted line is not without repercussions. Backing out of a deal without contingencies may be possible without legal action by using a mediator. If there's no resolution, the next step may be to plead your case in a courtroom.
The no-fuss way to get out of your home purchase contract is to do so through the contingencies. Contingencies are conditions that must be met for the contract to be binding. A common condition has to do with the home passing the inspection.
Timelines are often part of the conditions. For example, if the home inspection revealed mold damage, the sale of the home could be contingent on repairing the damage within 14 days.
Things can get very tricky when it comes to backing out of a legal agreement outside of the conditions. Not only could you lose your earnest money, but the seller could seek further legal action. Keep in mind that this scenario is not commonplace, but it is a possibility.
The home purchase agreement is as much about protecting the seller's interests as it is about protecting yours. Don't be alarmed. Instead, be informed. Need more information about being a smart homebuyer? Contact us today for a free consultation.
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Registered Mortgage Broker-NY State Department of Financial Services NMLS #19161
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