Coldwell Banker Res. R.E.

Legal Reasons to Back Out of a Real Estate Purchase Contract

by Harriet "Ronnie" Ellis 02/16/2020

Photo by Gerd Altmann via Pixabay

Once you sign a purchase agreement, whether you are the buyer or seller, it is very difficult to back out of it. However, as a buyer, you are able to back out if your real estate agent drafts the contract properly. Real estate agents use a standard contract. That does not mean that you have to accept the contract as it is written. You, as a buyer or seller, may make amendments to the contract. If you do make amendments, don’t get so crazy that the other party will file it in the round file.

Exceptions

Almost every real estate contract you see will have exceptions. In most cases, the buyer or seller has to add the exceptions. An exception is a condition that the buyer or seller has to meet. If the buyer or seller cannot meet that condition, the contract gets canceled and the buyer gets their earnest money back. Some examples of exceptions include:

  • Pending the buyer’s ability to obtain financing;

  • Pending a termite inspection;

  • Pending a home inspection; or

  • Pending clear title.

These are the most common exceptions, though buyers and sellers are not limited to only these. As for home inspections, buyers and sellers often negotiate repairs. If the repairs are significant, the buyer may ask the seller to grant a credit or to make the repair to keep the contract. If the seller refuses and the home inspection is listed as an exception, the buyer may back out and get their earnest money back.

Natural Disasters and Accidents

If Mother Nature rips down the house with a tornado or does extensive damage with a hurricane, the buyer may choose to back out of the contract without forfeiting their earnest money. If a fire burns the house down, whether it’s a forest fire or arson, the buyer may back out, as long as the buyer had no hand in the arson crime.

Other reasons a buyer may back out without forfeiting their earnest money include:

  • Flooding;

  • Extensive damage by trespassers;

  • If the buyer finds that the house is full of mold;

  • If the buyer finds that the seller did not disclose that the house had lead paint or asbestos.

Some contracts are written so that the buyer cannot back out because the seller did not disclose lead paint or asbestos. It is up to the buyer to ensure the clause in the contract is written so that they may back out of the contract. In fact, if asbestos or lead paint is a major concern for the buyer and the house is older, they may want to add that as an exception.

Always read real estate contracts carefully, including disclosures made by the seller. Amend the contract with exceptions if you are concerned about anything that may devalue the property.

About the Author
Author

Harriet "Ronnie" Ellis

In the Spirit of the Seabees

Born and raised on the Pacific island of Guam, daughter of a Navy Chief who served there in the Seabees during WWII, Ronnie learned and lived the Seabee motto "Can Do" from an early age. The Seabees are the construction battalion of the Navy, rebuilding roads, bridges, utility systems and barracks. Falling in love with the island (and Ronnie's mother), her father returned to the South Pacific after the war to help in the rebuilding. Watching his multi-national successes and generous, outgoing attitude, Ronnie says, played a key role in making her the authentic person she is today.

After excelling at Chaminade University, Honolulu, Hawaii, where she graduated with a Bachelor of Science in Business and Accounting, she immediately started following in her dad's international business and real estate footsteps, albeit in princess flats. Ronnie breathes real estate with fierce loyalty to her customers and colleagues. She imbues her professional commitments with an affable, affiliative "Ronnie" humor; a natural resource that attracts friends and allies. Ask to describe her business self in three words, she chose: Innovative, Creative and Collaborative. Coupled with her accounting background she is strongly analytical, allowing her natural flow of precision and productivity to benefit those she represents. Those who know her say that Ronnie pursues all aspects of business with joy, confidence and integrity.
"I've been a real estate professional for more decades than a lady might care to admit," she says with her biggest smile. "But now my path from general brokerage sales agent to broker in New York, my experiences as a North Carolina broker, custom home builder and real estate developer, give me daily insights into both the opportunities and land mines of the property marketplace."

As a licensed general contractor, new home construction became her specialty. She's built neighborhoods and won prestigious Parade of Homes awards. Both Ronnie and her husband, Edward, have earned the National Association of Home Builders highest sales designations: Member of the Institute of Residential Marketing (MIRM) and Certified Marketing Professional (CMP). An active and avid member of the National Association of Realtors, she was president of her local Board of Realtors in Havelock, N.C. She also supported the Rotary Club serving as newsletter editor, and she's a Chamber of Commerce member as well.

A visit to Melbourne, Florida in late 2010, convinced the Ellises that this should be their retirement home. With the move behind them and a mini-retirement under her belt, Ronnie decided she missed the day-to-day action of real estate. "The industry is challenging and changing constantly," she says. "I absolutely love it. That, and building relationships, working with customers and clients in all aspects. I stay excited and prepared to be a part of their journey."
Her final thoughts: "There are many people out there that I know I can assist especially with the backing I get from Coldwell Banker Residential Real Estate. Coldwell Banker keeps me upfront with the tools and marketing to meet all my customer's needs. And I've never been afraid of competition. Like Dad taught me: "Can Do."