Can a buyer cancel a real estate contract?

On Behalf of | May 22, 2023 | Real Estate Law |

If you are a buyer who has signed a contract to purchase a property in Florida, you may wonder if you can change your mind and cancel the deal.

Alternatively, as the seller, you may worry about the buyer changing their mind too.

The answer depends on several factors, such as the terms of the contract, the reason for cancellation and the stage of the transaction.

Inspection period

In general, there are two types of contracts that buyers can use to buy real estate in Florida: the standard Residential Contract for Sale and Purchase and the “AS IS” Residential Contract for Sale and Purchase.

Both contracts allow buyers to cancel during the inspection period (usually 15 days). However, while standard contracts give buyers the right to demand credits/repairs based on the inspection, “AS IS” contracts do not.

You terminate the contract by delivering written notice of your decision to the seller or their agent before the expiration of the inspection period. You do not need to give a reason, and you do not need to sign a release and cancellation form.

It is advisable to attach a release and cancellation form and request the seller sign to avoid deposit disputes.

Post inspection period

If you want to cancel the contract after the inspection period expired, or for reasons other than inspection results, such as financing issues or personal circumstances, you may have a harder time getting out of the deal.

In this case, you will need to review your contract carefully and look for any contingencies or clauses that may allow you to cancel without penalty.

For example, some contracts have a financing contingency that gives you the right to cancel if you cannot obtain a loan within a time frame. Other contracts have a right of rescission that gives you a window (usually three days) to cancel.

If your contract does not have any contingencies or clauses that apply to your situation, you may still be able to cancel by mutual agreement with the seller. However, this will depend on whether the seller is willing to let you out of the contract. The seller may ask you to forfeit your deposit or pay a cancellation fee as compensation for their time and expenses.

Alternatively, the seller may refuse to cancel the contract. In this case, they may sue you for specific performance (forcing you to buy the property) or damages (such as lost profits or expenses).