If the buyer requested repairs based on the inspections, but the seller won't grant that request, then the buyer is justified in cancelling the agreement and get his deposit back.
This is the case now with one of my listings. We provided inspections to the buyers. Nenetheless the buyers conducted their own inspections. There was nothing in the new inspection that was any different. But the buyers requested a major price reduction which the sellers won't grant. As such, by mutual agreement, we are cancelling the escrow and return the buyer's deposit.
Good luck. I hope this won't sour you on the experience. Please continue to search. The right property is bound to come along.
Bernard Gibbons, J. Rockcliff Realtors
DRE License # 01331583
Phone (925) 997-1585 - firstname.lastname@example.org
Most of what has been said so far is true. A buyer can cancel based on investigation and inspections. BUT technically the buyer can't just cancel without giving you a valid reason that is based on the contingency protections they are afforded. I see some agents here are stating that a buyer can just cancel. But if they don't provide a valid reason then the other side could very well have a case that the buyer had not dealt in good faith. The catch here is that it is not that hard for a buyer to come up with a reason to cancel while they are still protected by their contingencies. For instance, a buyer could simply state that they were dissatisfied with a visit to the local schools or that they met a neighbor they didn't like. These are issues that are impossible for a seller to remedy. And so the buyer walks. And as long as that buyer is still protected by the investigation/inspection contingency they can cancel based on that type of issue. Since they are not in default they are probably due to get the deposit back.
But I've seen buyers walk without giving a valid reason when in fact what they had done is to offer on more than one property at once and ultimately choose to pursue the other one. That is not a valid reason and could expose them to legal consequences that could include the loss of the deposit. Consult an attorney whenever necessary.
Talk with your agent they should be able to advise you based on your contract.
Better Homes and Gardens Tri Valley Realty
If you are beyond the contingency period, that's where things get sticky. You can certainly cancel but will likely forfeit your earnest money deposit.
It sounds like you have a reason for cancelling the contract, are within your inspection contingency timeline, and just want to know whether you have to provide the actual reason for your cancellation to the Seller.
Given all of my assumption are correct, CAR Form RPA (Residential Purchase Agreement) Para 10 covers buyer investigations and Para 14 covers your inspection contingency. Furthermore, CAR Form CC (Cancelation of Contract/Release of Deposit) is the form used to cancel a contract. Para 1E of the CC provides the Buyer/Seller to list a section of the RPA for the reason for termination. I'm speculating Para 14 is the source of your desire to cancel.
You should discuss your desire to cancel the contract with your Agent before making a final decision.
Be aware RPA [Para 10B] states the Buyer, at no cost, must provide complete copies of all investigative reports obtained by Buyer. The obligation to do so even survives after the termination of the Agreement.
Additionally, via the RPA, Para 14F, the Seller typically has 30 days to sign escrow instructions to return your deposit:
"If Buyer or Seller gives written notice of cancellation â€¦.A Buyer or Seller may be subject to a civil penalty of up to $1,000 for refusal to sign such instructions if no good faith dispute exists as to who is entitled to the deposited funds (Civil Code Â§1057.3)." The Seller must release the deposit within 30 days per Civil Code Â§1057.3"
( Civil Code Â§1057.3 can be found at http://law.onecle.com/california/civil/1057.3.html )
Do you need to provide a specific reason for cancelling? No, you could simply refer to an inspection report when filling out the CC form I imagine.
Would it be in your best interest to actually tell the Seller why you are cancelling? Probably. Being upfront with people is a sign of respect, and sharing the true reason(s) for wanting to cancel the contract might actually help you arrive at a mutual agreement that works with both Buyer and Seller.
Best of luck with your purchase!
And above all when there is any concern, consult an attorney for proper legal advice.
Broker / Owner
DRE # 350257