This is America, you can do whatever you want but this is also California and backing out of escrow means the seller and his lawyer will have a say based on what was offered initially in your contract. Be very careful about this sort of thing with a Realtor CAR contract. They are considered good faith contracts and the consequences for backing out could be costly.
Like everyone said below, for best information, consult an attorney for good advise with the exact situation.
Your RealtorÂ® should be answering this question for you! You have not provided enough details of your situation so you will be receiving generalized comments - yet, another reason to speak with your RealtorÂ®!
Assuming use of the most current CAR purchase contract you have three primary contract contingencies (inspection, loan, and appraisal). Note these three contract contingencies require written and "active" removal - passing a certain date does not typically remove the contingency (REO Addendums may remove the "active" element in favor of a "passive" removal).
Even after active removal of the Inspections Contingency, I believe Para 6.A.(1.)(4.) may allow cancellation of the contract by Buyer when a material fact has not been disclosed by Seller and not known by Buyer via inspection.
If so, you and your realtor should review your contract which spells out your legal rights and obligations. More than likely, you will want to review the terms, your contingencies/conditions pertaining to buyer inspection, appraisal and loan approval.
If you haven't cleared all those contingencies, you can still back out and hopefully get your deposit back.
If you cleared all those contingencies but you back out of this agreement, then you will be in breach of contract... and you may also lose your deposit but no more than 3% of your purchase price.
If you didn't use a realtor, and you and the seller hammered out your own agreement, best that you see a real estate attorney for help.