Getting out of a purchase agreement
Sam Schneiderman, Broker-owner of Greater Boston Home Team talks about what happens when buyer and seller give up on a transaction.
Sometimes it's necessary to get out of a real estate transaction.
I’ve seen buyers try to get out of a deal they've made because they:
- are unhappy about the inspections or the resolution of issues that arise from inspections
- can't get financing
- realize that they offered too much
- get cold feet and decide to back out
- become unemployed or get a job transfer
- find a better opportunity at another house
I’ve seen sellers try to get out because they:
- can’t agree with the buyer's request(s) after inspections
- can't afford to do the repairs or adjust the price to address home inspection issues
- decide not to move
- get a better offer
- decide they don't want to sell their homes to the current buyers
Only the first two circumstances for each party are covered by the average offer or purchase and sale agreement and only under certain circumstances.
To get out of a real estate deal, you need to understand how much of a commitment you made in the first place.
The first thing to understand is that Massachusetts real estate transactions must be written to be binding. Until the parties bind their agreement with a signed document containing property description, purchase price, time of closing, and any other terms or contingencies to which they’ve agreed, they are still negotiating and either party can walk away.
Whether it's a memo, letter, offer, option or purchase and sale, the signed agreement is a binding contract. Getting out of it is determined by exactly what is or isn’t in it. Unless there's a clear way out specified, consult an attorney immediately because contract law prevails, even if the agreement is on a napkin.
Many buyers, sellers, and agents think that unless a purchase and sale agreement is signed, either party can walk and the buyer will get their deposit back. That is not the case if the parties signed the standard form Greater Boston Real Estate Board offer that states “NOTICE: This is a legal document that creates binding obligations. If not understood, consult an attorney.” On the other hand, if the offer specifies that the deal is contingent on “a mutually agreeable purchase and sale agreement”, that language might be used as a “weasel clause” to get out.
Most, but not all, experienced agents and attorneys understand the importance of a properly detailed offer. Choose your agent and/or attorney wisely.
PERSPECTIVE:
If you aren’t sure about whether or not you want to buy a particular property, then don’t make an offer.
Any offer should be as detailed as possible and written by someone who is experienced with real estate contracts so that it contains everything needed to bind the other side to the deal.
Have you ever backed out of a real estate deal?
Was your reason covered in your contract or did you have to negotiate your way out?
Did it cost you?
