Real estate contracts provide legal safeguards that protect both buyers and sellers from future problems. It’s easy to sign a contract, but not as simple to break it. However, there are certain conditions wherein you could legally dissolve your contract. 

What’s Included in a Real Estate Contract?

A real estate contract is an agreement that legally binds two or more parties involved in a property exchange, purchase, or sale. It should include an offer and acceptance, consideration (i.e., the value each side will receive), and a legal purpose. Any sale is covered by the laws of the state where the property is located. The parties should also be legally capable—meaning they are at least 18 years old and of sound mind.

Why Do Buyers & Sellers Cancel Real Estate Contracts?

Although a real estate contract is legally binding, one party may want to break it if an unexpected situation occurs. Usually, the buyers wish to back out of a deal because they’re spending the money. Often, they may get cold feet due to issues turned up by the home inspection, such as mold, radon, roofing problems, or an unstable foundation.

Sellers seldom wish to terminate a contract, but if it does happen, they could face more serious legal and financial complications. Consequences for sellers are more severe because buyers usually have incurred expenses, such as attorney fees and inspection costs, by the time a contract is up for dissolution. The seller’s reasons for backing out could include a low appraisal by the bank or failure to find a new home.

How Do You Cancel Real Estate Contracts?

If you are a buyer, notify your real estate agent immediately. Most contracts have contingencies to meet before a specified date. Contingencies make it possible for buyers to end a contract legally. For example, if the seller will not make necessary repairs outlined in the contract, it may nullify the deal.

Sellers first need to seek advice from their real estate agents and attorneys since they face more serious legal ramifications. You can cancel the contract if a buyer fails to fulfill contingencies, such as getting approved for a mortgage, in time. You may also have a kick-out clause in the contract, which is enables you to obtain a better offer within a stipulated time frame. Otherwise, you have to present a financial settlement or risk being sued by the buyer.
 

Canceling real estate contracts is complicated, but Cecil & Cecil PA will guide you through the process. Their attorneys have helped High Point, NC, residents since 1993, and they offer free consultations for most real estate cases. Call (336) 883-8383 to schedule your appointment, and visit their website today for more information on their services.