Can you back out of a deal as a homebuyer if you are under contract on a home?
The answer depends on where you are in that transaction.
Let’s use a standard transaction as an example to help answer this question. In a standard transaction, you will have several different contingencies that you can use as an “out” without penalty.
The most common contingency used as an “out” is the home inspection contingency. If you don’t like what you see when the house is inspected, you can back out. In Washington State there are also a couple of common contingencies used to back out of a deal:
- Three days to review the seller disclosure statement.
- Short period of time to review the title report.
- If you are buying a condominium with a homeowner’s association, you usually have a 5-day window or less to view the homeowner’s association documents.
All contingencies come with different timelines that can vary and be negotiated between buyer and seller.
As long as you are using a contingency and you are still within that contingency’s timeline, the answer is yes, you can back out of a deal.
If your contingency timelines have expired or you don’t have contingencies in place, you can still back out—but there is a penalty. In most cases that penalty is the forfeiture of earnest money. This is called “default of contract”. Don’t be that buyer who gives up their earnest money. Make sure you have contingencies in place in case a situation arises and you want to back out of a deal.