Purchasing a home and selling a home are two of the biggest decisions most people make. When you enter into a contract for a real estate purchase there are complications that can arise. You could. find out that there is trouble with plumbing or a crack in the foundation. This is why documenting everything through contingencies can protect you and your deposit. You want to be careful and pay close attention to the timelines on your contingencies so that you have the option to withdraw from the deal without any penalties or the loss of your deposit. Real estate laws regarding your contract and escrow can vary so it is important you do your research and work with a knowledgeable agent.
How Can I Withdraw From A Deal
As a buyer, you want to ensure your purchase agreement has all the necessary contingencies. You will need a mortgage contingency if you are using financing for your home purchasing as well as contingencies for all of the inspections and appraisals. If you are getting financing, lenders will require an appraisal before they approve your loan in order for you to purchase your new home. If you currently own a home and need that sale to go through before purchasing a new home, you will need this written yo as a contingency. Double-check all of this because oftentimes you can not add a contingency after a seller has accepted an offer.
To withdraw from escrow, you must do so before a contingency period ends regarding why you are withdrawing. If you choose to cancel escrow after that period of time is waived then the seller will be entitled to your earnest money deposit. During contingency periods a buyer and seller can decide to shorten or lengthen a contingency period.
Withdraw in Writing
Anytime you withdraw from escrow you must do this in writing. This is a written document canceling the contract and your escrow must ensure this is signed by the seller to officially withdraw from escrow. Both the buyer and seller must agree to what is happening with the buyer’s earnest money deposit. Sellers can take part or keep all of the deposit depending on the contingencies.
They can always decide to return it to the buyer in full but this can depend on the circumstances in which a buyer is asking to withdraw. In some cases, a seller can take legal action to make the buyer perform the purchase of the home according to the contract. This does happen especially when contingencies and addendums are not written into the contract properly. Likewise, if the seller is withdrawing from the contract, the buyer has a right to a lawsuit as well if the proper cancellation is not performed within the contractual terms.
Accepting an offer and going into escrow is a legal contract that you are entering. It is imperative you have all of the necessary contingencies and “outs” you may need to be documented and agreed upon by both the buyer and seller. Make sure you are working with an agent that knows your specific situation and is able to negotiate and document your contingencies so that if there is a need to back out of escrow you are legally within your rights and able to get your deposit back.