Under what reasons can a buyer back out of the purchase of a home after fully executed contract?

Asked by Ready to leave California, 92503 Thu Oct 7, 2010

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11
Steven Ornel…, Agent, Fremont, CA
Thu Oct 7, 2010
Hi “Ready to leave California”,

Assuming you are using the most recent CAR Residential Purchase Agreement, here are a some, NOT ALL, of the ways a Buyer may back out (possibly losing their deposit, or not), or cause the Seller to cancel** (possibly losing their deposit, or not), a "fully ENDORSED contract" (as others have already said, read your contract for clarity!):

Escrow Close (Para 1D)
Escrow Deposit (Para 3A)
Inc. Escrow Deposit (Para 3B)
Verification of Down Payment/Closing Costs (Para 3G)
Loan Pre-Approval (Para 3H1)
Loan contingency removal (Para 3H3)
Appraisal contingency removal (Para 3I)
Seller Condo/PUD Disclosure (Para 7A)
Seller HOA Docs Request Deadline (Para 7B)
Seller Reports (Para 14A)
Inspections contingency removal (Para 14B1)

**Note that in order for the Seller to cancel a Notice to Perform must be submitted to the Buyer first.

Best, Steve
1 vote
Kevin Olson,…, Agent, Colorado Springs, CO
Thu Oct 7, 2010
Fully executed means everything is said and done. Both posts below are correct, possibly up to and including being banned from Disneyland.
1 vote
Mack McCoy, Agent, Seattle, WA
Thu Oct 7, 2010
Where are our posters getting the idea that they're in a "fully executed contract" - RTL, you're not the only one. Agents say this sometimes, too.

It's only fully executed when everything contracted for happens - deed and money switch hands, et cetera.

You're in an executory contract, the seller still has the deed and doesn't yet have your money.

With that little bit over, the fact is, the ways you can escape are stated in that executory contract, and if there aren't any, and you try to escape, you can be sued for damages, specific performance, and I think in California, be banned from Disneyland for life.
1 vote
J R, , New York, NY
Thu Oct 7, 2010
Your contract should give you the answer to that. It specifies what circumstances release you.
1 vote
Terry Bell, Agent, Santa Rosa, CA
Thu Oct 7, 2010
An "as-is" clause doesn't nullify any inspection period. check your contract and check with your agent for the contingency periods in the contract. Did they have an inspection period, appraisal period, contingency for them to sell their house, did they sign off on contingencies, was there a clause to increase the deposit after the removal of contingencies, those are all questions for your agent to go over with you. Best, Terry Bell, Realtor, Santa Rosa, CA.
0 votes
Steven Ornel…, Agent, Fremont, CA
Thu Oct 7, 2010
An all cash "AS IS" Buyer is great; however, be aware that there is really no such thing as "AS IS" in CA, the Buyer always has the right to investigate the property within the timeline of the Inspections contingency removal period (Para 14B1). Once this contingency is removed you will be well on your way to a closed escrow. The only other way the Buyer might cancel the contract would be for non-disclosure on your part or fraud (not that I am suggesting you would do this intentionally). Be sure that your Agent has made ALL disclosures per contract!
0 votes
Kevin Olson,…, Agent, Colorado Springs, CO
Thu Oct 7, 2010
It's okay to be nervous, that's normal. Having a cash buyer makes things more secure, especially buying as-is. Good luck in the future with your new home.
0 votes
Ready to lea…, Home Seller, 92503
Thu Oct 7, 2010
Thank you everyone for your answers.
I am not the buyer I am the seller and the person we accepted the offer from is paying cash with an as is clause and the papers are signed on both ends. We are set to close at the end of the month. Just getting a little nervous is all we are using this money to purchase a home in another state.
0 votes
Keith Sorem, Agent, Glendale, CA
Thu Oct 7, 2010
RTL
You need to:
1. Ask your Realtor
2. If they don't know, ask their BROKER
3. If they don't know or you do not have a Realtor, then see an attorney.

THE ONLY people that can advise you need to have reviewed all the pertinent paperwork.
0 votes
Lisa Thorik…, , San Diego, CA
Thu Oct 7, 2010
When representing buyers I often make sure that there are always several clauses a client can use as an avenue to walk away. There are many reasons why someone might change their mind after the offer is accepted. Since my obligation as the buyers agent is to best represent them, having a way to walk away with minimal time or money lost is my negotiating priority when drawing up the the contract.
Web Reference:  http://www.lchometeamsd.com
0 votes
Bill Eckler, Agent, Venice, FL
Thu Oct 7, 2010
Ready,

The acceptable reasons for being able to withdraw from an executed contract will vary depending on the terms of your agreement and whether or not the contract has been followed to the letter.

The best specific information for you personal situation would likely come from consulting an attorney.

Good luck,

Bill
0 votes
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