For many, purchasing a home is often their largest financial commitment. This path to homeownership is not without its challenges. Sometimes, unforeseen circumstances require difficult choices.
Real estate contracts in Florida are legally binding. Once you sign, you commit to the terms. What happens when you want to back out of a real estate deal?
Knowing the risks can save you from financial and legal troubles
Here are some key risks to consider when planning to back out:
- Loss of earnest money deposit: This deposit shows you are serious about buying. You may lose this money if you withdraw without a valid reason.
- Legal action: Sellers may sue for damages if you breach the contract. This could involve covering the difference if they sell the property for less than your offer or additional costs incurred due to the delay in the sale.
- Damaged reputation: Word can spread quickly in the real estate community, and backing out of a deal can damage your reputation. This can make it harder to negotiate future transactions.
- Credit score impact: If you back out of a deal, it may negatively impact your credit score. You may find it challenging to secure a mortgage in the future.
In Florida, real estate contracts often include a 3-day “cooling-off period” to cancel the contract within a certain time without penalty. You should check if your contract includes this option.
Some contracts also include contingencies that allow buyers to withdraw under specific circumstances. Common contingencies include home inspection issues, financing problems, appraisal concerns and title defects.
If your contract includes these contingencies and you meet the specified conditions, you may be able to cancel the agreement without legal repercussions. Most contingencies have strict deadlines, and you must act within these timeframes or lose your right to back out.
Seeking legal help when necessary
Even with valid reasons, the specific language in your contract will determine your rights and obligations. Sellers may also not agree with your interpretation of the contract or contingencies. They might argue that you did not fulfill your obligations or that your withdrawal reasons are invalid.
It is crucial to have an experienced Florida attorney review your real estate contract before signing. Your attorney can help negotiate with the seller and potentially find ways to minimize your losses if you must back out.
