When can you back out of a offer to purchase agreement?
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When can you back out of a offer to purchase agreement?
We have a contract and have already done an inspection. However, we want to back out of the offer and get our earnest money back. What are our options?
Asked on August 1, 2018 under Real Estate Law, Wisconsin
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
At this point, if you have a signed contract and have already done the inspection, you are locked into the contract--that is, you cannot get out of it--unless:
1) There is some term or "contingency" in the contract which will allow you out of it, and you fully comply with the requirements of that provision or contingency. For example, if there was an "inspection contingency" and the inspection found "material" (important) issues with the home, that could let you out of the contract.
2) The seller committed fraud--he lied about or failed to disclose some important issue with the property, which can provide grounds to void the contract.
3) The seller violates or breaches some important provision or obligation of the contract, like not being able to transfer clean or good title, or not being willing to close on time; one party's breach of contract allows the other party to treat the contract as terminated.
Otherwise, without some cancellation or termination contingency, fraud, or a breach, you cannot "back out" of a contract but rather are held to what you signed. If you refuse to go through with the sale, at a minimum, the seller can keep your earnest money; in some circumstances, if your refusal to go through with the transaction causes the seller greater provably losses or costs, the seller could sue you for additional amounts.
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