Dear Real Estate Adviser,
Where on the purchase agreement does it tell buyers how long they have, once signed, to change their mind on purchasing a single-family house?
— Karen P.
Dear Karen P.,
Unless you live in Jersey, nowhere. That’s assuming you didn’t add your own “cooling-off” period to your contract, which from the looks of it you didn’t.
Buyers and sellers often errantly believe that such a 3-day period, called the right of rescission, applies to single-family homebuying contracts, car purchases and some other capital purchases. It doesn’t. Except for New Jersey, the federal 3-day cancellation period applies only to mortgage refinancing, home equity loans or similar lines of credit secured using the home as collateral.
There are exceptions
It’s worth pointing out that the purchase of condos, co-ops and other common-interest living units allow a mandated “review period” of varying lengths in some cities and states. For example, in Florida, the period in which buyers can cancel such purchases and still receive full refund of deposit is 15 days, while in Connecticut, it’s 5. There are also state-mandated cooling-off periods for time-share purchases, and these vary from 3 to 10 days.
You can hope for a problem
Not so for purchases of single-family housing. However, you can back out legitimately if the house fails inspection (sometimes called the “cold feet contingency”) or you can’t acquire financing or if there’s a disparity between the appraisal and asking price, all respective to the requirements of the contract you signed. Another “out” can come if the selling party has misrepresented the property in some form, which can be another judgment call.
You can ask out
Of course, there’s nothing stopping you from directly informing the other party that you want out and explaining why. Sellers will often relent these days when the other party begs off. That’s because there may be backup buyers in the wings who are willing to pay even more.
You signed a contract
But realize the contract you signed is a binding document, and if you have no valid reason for backing out and the frustrated sellers decide to hold your feet to the fire (ouch!), you may lose your earnest money. Have a talk with your agent about your reasons for wanting to pull out and your most practical options forthwith.
Here’s hoping you can gracefully exit this deal. Given this experience, be sure to add your own cooling-off period to your next purchase agreement, assuming the sellers will go along with it. Most of the time they will, unless there are multiple offers.
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