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Real estate sign in front of a house for sale in a nice suburban neighborhood.


The Heritage Law Group Aug. 21, 2022

You’ve decided to sell your home and signed a contract with a potential buyer who made the highest and most qualified bid. But then something happens, and you change your mind. You no longer want to sell. Can you just back out?  

Real estate contracts in California have various contingencies that protect the buyer, and sometimes your best bet in ending a contract is for the buyer to back out because of unanswered repair requests, a low-ball appraisal for lending purposes, or unfavorable lending terms.  

Sellers, on the other hand, have few if any contingencies built into the real estate contract. Though they can add some from the beginning, this requires two actions: a review of the contract by an experienced real estate attorney before it is signed and the inclusion of – and signed agreement to – seller-friendly contingencies from the beginning of the process.  

In other words, sellers must anticipate that something may happen that might cause them to cancel or terminate a deal for whatever reason and should have the services of knowledgeable legal counsel guiding them from the outset. The experienced real estate attorneys at The Heritage Law Group maintain offices in San Jose and Aliso Viejo, California, and we proudly serve clients both in Northern and South California.  

Reach out today if you’re about to get involved in a real estate transaction and want to protect your interests, including your right to back out of a sale. 

Reasons to Change One’s Mind After Agreeing to Sell 

Many factors can come into play that could alter a seller’s decision to sell their home. Their finances may have shifted dramatically by losing a job or income. There may be some kind of emergency, or serious illness. Perhaps they just can’t find a suitable replacement residence that they like or can afford.  

These are probably not reasons recognized in your contract to enable you to back out unless you have some sort of contingency worded into the deal and the buyer has agreed to the terms. 

Possible Seller-Friendly Contingencies in a Sell Agreement 

Some of the three most common seller contingencies include:  

  • AN ATTORNEY-REVIEW PERIOD: This gives attorneys for both sides anywhere from three to five business days to review the contract and suggest revisions. After that time period, the contract becomes binding.  

  • A HOME-OF-CHOICE CONTINGENCY: This can be inserted to give the seller a specific time frame to find a suitable new residence and to give the seller the option to back out if such home is not found in time. Again, however, the buyer must agree.  

  • A BUMP OR KICK-OUT CLAUSE: This contingency gives the seller the right to “bump” the current offer if a better one comes along. Again, the buyer has to agree in writing.  

Another option, which doesn’t necessarily need to be added to a normal sales contract, can arise if the buyer requests extensive repairs to the structure. The seller can simply stall or renege on performing the repairs, and the buyer may choose to back out on their own. Remember, they can also back out if the appraisal comes in too low or the financial terms too unacceptable. Any of these can put the property back in the seller’s possession.  

Also, a verbal agreement – or shake of the hands – is not legally binding. The contract must be in writing and signed by both parties. 

Possible Consequences of Backing Out 

If you as a seller decide to back out without having a solid reason based on an approved contingency, you can face negotiations at the very least, and at the worst, some sort of legal action, including a potential breach of contract lawsuit.   

In other words, you can face out-of-pocket expenses to forego a sale while negotiating or even upfront legal expenses if you face a court challenge. If you lose a court case, you may end up compensating not only the buyer but also paying that person’s legal fees.  

During negotiations you may find the buyer to be a sympathetic sort who will listen to your “tale of woe” or whatever justification you offer and agree to end the deal. On the other hand, you may have to offer a cash settlement to get the buyer to back off. Your listing agent may also have their hand out for a settlement of some sort from having lost their commission fees. 

The Heritage Law Group Can Help 

All of this means you really need the advice and help of a seasoned real estate attorney before signing any sale agreement. There may be options to write in further protections for you before signing on the dotted line. The attorney may also scour over the details of the agreement and actions taken by buyer and seller prior to signing the agreement that can be asserted to help you back out, but fraud or deception by the buyer might be your best route here.  

At any rate, you shouldn’t go into a real estate transaction without the review and oversight of a knowledgeable real estate attorney. Contact our team at The Heritage Law Group. We have offices in San Jose and Alisa Viejo and can help you throughout the state of California.