You're getting some great answers here. Here's my take on your situation.
If you have removed ALL of your contingencies IN WRITING, and are now realizing the mortgage will be too much for you, you owe the seller your deposit. The CA RPA dated 4/10/202 Section 25 states:
"If Buyer fails to complete this purchase because of Buyer's default, Seller shall retain, as liquidated damages, the deposit actually paid. If the Property is a dwelling with no more than four units, one of which Buyer intends to occupy, then the amount retained shall be no more than 3% of the purchase price." If you and the seller signed this clause, then it is in effect.
But just having it in the contract does not complete the cancellation - you will have to sign a CAR Cancellation of Contract, Release of Depost and Joint Escrow Instructions form - both you and the seller will have to sign. This form stipulates the disposition of the deposit actually paid. Escrow cannot disburse the funds until all parties have signed.
And just to warn you, as my good friend and great Realtor Vicki Lloyd warned, you may be on the hook for HOA docs. And they can be way more than $100 if there are multiple HOAs involved. But sometimes if you return the docs to escrow, they will not charge you. And if they do charge you, and you still have the docs, work with escrow to get reimbursed when the next buyer goes into escrow and their deposit is received by escrow - essentially, re-sell the HOA docs to the next buyer to get your money back - get it?
On top of that, your escrow company may charge you a cancellation fee. This will be stated in your escrow instructions if that is the case. It can be pretty pricey. I'd try to sweet talk the escrow company owner into waiving the cancellation fee. Hey, I'd do the same thing to a cop giving me a ticket - it never hurts to ask!
You won't be sued by the seller if you take care of everything by cancelling the escrow and release the appropriate funds to the seller - and paying the appropriate additional charges. However, if you do not comply with the terms of the contract, you are most probably entering Binding Arbitration - which you most likely agreed to by signed off on section 26. B. the RPA as well. And that will cost you more money on top of everything listed above.
As for there being instances where the seller will work with the buyer on a different, less expensive home - that all depends on whether or not the seller you are under contract with HAS a different, less expensive home. He he has something you like, and he's still willing to work with you, why not?
It would be best to review your contract, consult with your Realtor, and do the right thing from a legal and moral perspective. Does that make sense?
Hope this helps.
Leslie Eskildsen, Realtor
Altera Real Estate
As seen in the Orange County Register: http://www.ocregister.com/articles/mumbo-263352-jargon-jumbo.html
Do you have an agent? Discuss it with him or her and see if you can still get out. If you are having cold feet, it's best to be safe than sorry.
Sounds like you are having a case of very cold feet. Before you cancel the escrow, are you sure you can not handle the monhtly mortage?
If you cancel ,you will most likely loose your deposit, there is no way around that unless for some reason the seller is feeling very generous.
Best of Luck to YOu,
Kawain Payne, Realtor
I see you have some good answers. The bottom line is we don't know what stage of transaction are in at this point. If you are within the first 17 days you can back out with no question asked and get your deposit back. I hope your Realtor already told you that. If you have passed the 17 days period then you might want to check if you have signed off all the contingencies or any of them at all. If you are at earlier stage most of the Sellers would understand specially with first time home buyers. I have had few cases that my buyers lost their jobs, or legitimate reasons and even at late stages after removing almost all the contingencies they could get their Deposits back. Yes contract is binding after some period but people are people and if your reason is true and real they understand. But what is strange to me is how come you did not know your monthly payment before you go into Escrow?!! That can be a little problem for you right there.
Hope everything works for you soon.
Lake Forest - CA
You have some good answers here. My question to you is; Why are you wanting to back out? Really. Are you nervous about the payment? You know it is very normal to be a bit on the nervous side at this point. This is very likely your greatest purchase you have ever made in your entire life! It is a great commitment to yourself! When you say the payments are too high, that puzzles me. You must have been given a good faith estimate when you found the home; and also prior to looking for a home you must have been told what the payments would be. I know right now that lenders are just not allowing people to really obtain a loan beyond their means. I have to think that you indeed are qualified. So I ask you, are you just nervous? Or has something changed that makes the payment undoable for you? (Is undoable even a word?) LOL! Anyway in this market we are seeing some of the best buys and interest rates to come along in decades! My sincere advice to you is; don't miss that opportunity.
Talk to your agent, talk to your tax consultant. You will realize tax advantages that will offset the payment also. If after doing that you still want to cancel, your Realtor will be able to tell you what your options are. We here do not know what is in your contract, so we can't really tell you that, but your agent can. There are of course contingent conditions that may allow you to cancel and get your money back. You need to read your contract with your Realtor.
Ask yourself "What wouldn't happen if I don't buy this home?" give it careful consideration. You want a home or you would not be in this position. That means something!
Best of luck to you,
Prudential CA Realty
It's impossible to answer your questions without knowing more details. I recommend that you contact a Realtor for assistance, or a Real Estate Attorney. The CA laws are basically the same for "new" properties and "resale" properties. You have the links to eight licensed real estate agents. Contact one of us and let us help you. Good luck.
You should be talking to your agent about this as he or she is supposed to be looking out for your best interests.
Good luck -
Your contract, and therefore your Realtor, would have the answer to this question. I am not an attorney, nor do I have access to your specific contract. I highly recommend that you speak with your agent and/or a real estate attorney to review your contract for the specific terms of the contract. That will spell out both your obligations and your rights, specific to this purchase.
The following information is based on my experience and the standard Residential Purchase Agreement ("RPA"). The RPA has a 17 day contingency period. During that time, you can usually cancel and get your deposit back. If you are beyond the 17 days, then you would have to look to the contract to see if there are other contingencies that have not been satisfied.
Most standard RPAs have a loan contingency. If you do not believe that you will qualify for the payments, then you will not qualify for the loan and therefore this contingency will not be met. Were you prequalified or pre-approved before you made your offer. What has changed, as regards the payments, since then?
Lastly, if all parties initialed the liquidated damages clause (and this is the critical part, every party to the contract must intial this clause for it to be valid), then your damages would be limited to your good faith deposit. Again, this is based on executing the RPA and ot having any counter offers or amendments to the RPA that have changed the standard language.
I am sorry to hear that you have found yourself in a situation that makes you uncomfortable. That is not a good way to start your home ownership experience. You need competent advice. Most importantly, don't do anything without first consulting with your agent. If they are the ones that got you in this bind to begin with, then speak with their broker. They should be able to advise you on your rights and obligations under your specific contract. If you get no answers from them, they should be able to refer you to a real estate attorney who will be able to tell you what to do. Do not make this decision based on information you receive in a forum. We have no visibility to your specific situation and therefore cannot provide you with advice regarding your contract. Get professional help and Dare to Dream.
Shel-lee Davis, QSCÂ®
Certified Distressed Property Expert â€“ CDPEÂ®
Short Sale & Foreclosure Resource â€“ SFRÂ®
Certified HAFA Specialist â€“ CHSÂ®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
Your concerns are justified and your lender and agent should be able to assist.
There may be way for you to cancel the contract. The California Purchase Agreement is written in favor of the Buyer with many ways for the Buyer to back out of a deal. So, you need to speak to your agent and let him/her no what is going on. If you have not removed all of your contingencies, you may have some options. If you think the month to month will be too much, you should speak to your lender. Have you been approved for your loan? Again, you need to open up to your agent and find out what your options are?
Suggest you talk to your agent/broker and get your deposit back the right and legal way...
Prudential CA Realty
It's hard to say if you have an option to cancel escrow and get your deposit back without seeing the contract. However, I recommend that you speak with your Realtor about your agreed upon inspection period. Are you still within that period? If so, you have an ability to cancel escrow. Also ask your Realtor about the 3 day right of cancellation based on the Transfer Disclosure Statement. That could be another way for you to cancel the escrow and get your deposit back. Good luck!