Whether you are buying or selling property, sometimes real estate deals just don’t work out. Although most real estate purchase and sale agreements drafted by real estate attorneys contain provisions that legally allow you to terminate a deal based on certain contingencies, breaking a contract must often be done delicately. These tips for terminating a real estate contract the right way can help you avoid hard feelings between buyer and seller and make the process much less stressful.
1. Hire a real estate lawyer. Before you even begin the process of buying or selling property, seeking the counsel of an experienced real estate lawyer in PA is vital. Having an attorney in your corner who will properly draft contracts and advise you on the best course of action regarding your real estate transaction is an invaluable resource and will ensure that your rights and interests are protected.
2. If you’re a buyer, know your options regarding termination of the contract. Real estate purchase and sale agreements include contingencies for procuring financing; clean home inspections, and disclosure of any existing problems with the property. If a buyer fails to get a mortgage secured by the date specified in the agreement; the home inspection shows that serious repairs are needed, or if it is revealed that the seller didn’t disclose major issues with the property, a prospective buyer can usually terminate the purchase agreement without a problem. If all contingencies have been met and the buyer terminates the purchase agreement, the seller may be able to keep the buyer’s earnest money deposit.
3. Include a “kick-out” clause. Adding this type of clause to a real estate purchase and sale agreement protects both the buyer and seller. If buyers need to sell their current home before purchasing another, the “kick-out” clause allows the seller to keep showing his or her home while the buyer’s home is for sale. If the seller receives another offer, the sale and purchase agreement can be terminated. Conversely, if a seller needs to find a new home and is unable to do so in a specified amount of time, the contract can be terminated. Contact a skilled contracts lawyer near you who understands the ins and outs of drafting a solid sales agreement.
4. Understand grounds for termination as the seller. The importance of having an experienced real estate attorney include stipulations that provide outs for the seller cannot be understated. Ideally, in a real estate sale and purchase agreement a seller has agreed to the price that has been offered and has accepted the terms and contingencies specified by the buyer; so it can often be more difficult for a seller to terminate a purchase and sale agreement gracefully and without repercussions.
5. If you need to back out, do so promptly. If you need to terminate a real estate deal, let the other party know as soon as possible. Backing out too late in the game can be considered breach of contract and lead to costly litigation and other problems.
Our West Chester real estate lawyers at Carosella & Associates can provide the experienced counsel you need to effectively bow out of a real estate contract.