Home Buying in 91790>Question Details

East Bay, Home Buyer in San Leandro, CA

can buyer back out and received full deposit back on a REO property when bank already accepted the offer?

Asked by East Bay, San Leandro, CA Wed Sep 22, 2010

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This will be 100% dictated by your rights which are outlined in the purchase contract and any bank addendums you may have signed. Bank addendums will supersede all verbiage within you purchase contract. Your Realtor should be able to answer this question based on their interpretation of all forms signed by you. If they are unsure, take these forms to an attorney to review. Even if you are entitled to your EM back, the bank could still dispute your rights if they wanted to be difficult. I wish you the best of luck.
0 votes Thank Flag Link Thu Sep 23, 2010
Hi East Bay,

Since you are located in San Leandro I'll assume you used the standard CAR Residential Purchase Agreement to make your offer. If this is true, you can certainly cancel the contract if you are within the 17-day inspection contingency period (or other period you set) of Paras 3H(3) Loan, 3I Appraisal, and/or 14(b) Inspections.

However, given that this is an REO purchase one would also have to assume that you were required to sign an Addendum from the REO, which likely overrides the CAR RPA in this regard. So, you need to locate that Addendum and then search for the sections that speak to the three contingencies listed above.

While the CAR RPA requires the active removal of the three contingencies listed above (with the Seller having to provide a Notice to Perform before cancelling the contract), the REO Addendum may in fact convert these to a passive removal, meaning that you automatically remove one or all of these contingencies by not actively removing them before the due date.

Hence, as others have pointed out, your answer can only be arrived at by reading what you have committed yourself to in the contract documents.

Best, Steve
0 votes Thank Flag Link Thu Sep 23, 2010
The answer to your question is in your contract. By contract, I'm referring to the ratified contract signed by all parties upon acceptance. Possibly in the form of an addendum to the purchase agreement. It would have stated if there were any contingency periods given for home inspections or loan contingencies. Typically, if your agent used the C.A.R. Residential Purchase Agreement, the standard time-frame is 17 days. This would be your allowed time to cancel unless there was a counter offer requesting a shorter time frame such as 7 days. There's no difference in buying a bank owned property, short sale, or traditional sale, those clauses should be clearly disclosed. Remember, that a cancellation should not be taken lightly. A seller has an estimated time frame to sell that property and that definately is true for bank owned properties. An earnest money deposit is used to convey in good faith that a buyer has full intention of following through with the sale. Therefore, if you are considering backing out of the deal, it should be with
0 votes Thank Flag Link Thu Sep 23, 2010
If you are within your inspection or due dilligence period, you can cancel the contract with no penalty. And receive your earnest money deposit back in full.

Best of luck to you!
Web Reference: http://www.DesariJabbar.com
0 votes Thank Flag Link Thu Sep 23, 2010
If a California Association of Realtors (C.A.R.) purchase agreement was used you may be able to get your deposit back as long as you did not receive a "notice to perform" and did not sign the "contingency removal" form. However most REO sellers use their own contracts in order to make it difficult for a buyer to cancel easily once a contract is fully executed. If that's the case you need to see if your contract allows for any contingencies on your part and if you are still within your time frame. Seek legal counsel on this one.
0 votes Thank Flag Link Thu Sep 23, 2010
You should be able to cancel as long as there is still some kind of contingency. No contingencies means that they could keep your deposit.

Sara Mehrpouyan, CDPE
Rodeo Realty
Dre Lic #01712757
0 votes Thank Flag Link Wed Sep 22, 2010
Depending on where you are in the due diligence process, as well as what was written in the contracts, it is very possible to get out of the transaction. During due diligence in Nevada (where I am, which is generally 10 days in our contracts), you can cancel the transaction if you not happy with the homeowner's association requirements, if the inspection comes in with too many repairs, or for numerous other reasons. HOWEVER, read your agreement and discuss this with your real estate agent. If you are in the early stages, the likelihood is that you can cancel the transaction and get all your earnest money back. If you are past due diligence, it gets a little more challenging, but there are still ways to cancel the deal. Again, discuss your reason for needing/wanting to cancel with your agent who can give you the best advice.
0 votes Thank Flag Link Wed Sep 22, 2010
Yes. For details, your agent should review the contract with you and involve his/her broker if you or they feel additional help is needed. There is no "automatic" out that anyone here will be able to offer UNLESS it had a PUD/HOA.
0 votes Thank Flag Link Wed Sep 22, 2010
Depends on how original contract was written. Did you have inspection provision? Was the contract AS-IS-Where_Is?
0 votes Thank Flag Link Wed Sep 22, 2010
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