How to Cancel a Home Purchase Agreement

Written by stephanie ellen | 13/05/2017
How to Cancel a Home Purchase Agreement
A financial penalty could be imposed if you break a purchase agreement. (Thomas Northcut/Photodisc/Getty Images)

A home purchase agreement is a legally binding contract between a seller and buyer for property. If you are suffering from buyer's remorse, you may not be able to get out of the contract without a penalty. Once you have signed a home purchase agreement, you are obligated to go through with the home purchase. Certain contingencies are built into any home purchase agreement; understanding what these contingencies are could be the key to cancelling the contract without penalty.

Ask the other party if you can break the contract. Although home purchase agreements are legally binding, a buyer or seller may be amenable to breaking the contract especially if there is a good housing market.

Read the purchase agreement to find out the reasons you can break the contract without penalty. For example, you may be able to break the contract if the home doesn't appraise at a certain price.

Get the house inspected by a home inspector. Many real estate contracts are dependent on a successful home inspection; if problems show up on the report, you may be able to back out of the contract. Make sure the inspector notes everything he finds wrong in the house.

Take the contract to a lawyer or real estate broker. Real estate contracts can seem like a legal jungle; a professional look at the contract may find a way out that you didn't notice.

Tell the other party that you are cancelling the contract and tell them why. You may have to sign a notarised statement with your reasons for cancelling the contract. Once the cancellation statement has been signed by both parties, you should get your deposit money back.

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