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Can You Break a Real Estate Contract? 5 Things to Know

If you're buying or selling a home, you may be wondering whether it's possible to break a purchase agreement after it's signed. While it's always possible, there can be some serious consequences if it's not done properly.

If you're buying or selling a home, you may be wondering whether it's possible to break a purchase agreement after it's signed. While it's always possible, there can be some serious consequences if it's not done properly.

Buying or selling a house can be a frightening prospect. For sellers, it can be difficult to imagine passing on the place that's held so many of your cherished memories to a complete stranger, and for buyers, it can feel scary to commit so much money and so much time to a house you've only been in a few times.

When it comes to major life events like purchasing a new house or selling the one you've been living in, it's common to get cold feet. But if you change your mind after you've already signed a purchase agreement, is there any way out?

The answer is not so simple. Technically, yes: you can pretty much always get out of a purchase agreement, but that doesn't mean there won't be repercussions. A purchase agreement is a legally binding contract, and that means you can't simply change your mind at the drop of a hat — suddenly deciding that you don't like the way the house “feels” or that you don't like the buyer anymore because they pour their milk before their cereal simply aren't sufficient grounds for canceling the contract.

However, in a well thought-out purchase agreement, the buyer and seller will both agree on certain contingencies, or conditions that, if met, will allow either party to back out of the sale scot-free. These are the only ways to get out of a sale or purchase without breaking your legal obligations to the buyer or seller.

In this article, we're going to take a look at lawful and unlawful contract breaches. We'll discuss what happens if you break your contract within your rights, and what happens if you don't. Breaking a real estate contract can be tricky, so here's what you'll need to know.

Unlawful Breaches

So, let's say you've tried to let it slide, but you've decided you simply can't buy a house with an odd number of front steps or you just can't bring yourself to sell your home to someone with such an ungodly mustache. Fair enough. Unfortunately, these defenses won't hold much weight against the purchase agreement you signed — unless there's a mustache contingency, at least.

What happens if you decide to follow your heart and cancel the sale anyway? The consequences will depend on whether you're a buyer or a seller.


For sellers, you will need to return the buyer's earnest money — this is the money a buyer pays upfront to lock in their purchase. Usually, the earnest money is kept in escrow, so the seller won't need to pay it back directly. Instead, the seller will just never collect the money.

However, if the seller objects, the case can be taken to court. This can be costly, and it's generally best to try to resolve these situations outside of the legal system.

In some cases, the buyer can sue the seller for financial losses they've experienced due to the failed contract — this can include inspections they paid for or the cost of short-term housing. It's also possible that a judge will rule that the seller needs to go through with the sale as planned, but this is quite rare.


If a buyer breaches their contract, they will lose their earnest money deposit as well as any fees they paid to inspectors, appraisers, etc. It's also possible that a seller can sue them for breaching their contract. In rare cases, a court can order the buyer to pay the full purchase price of the house.

Breaking a Contract Lawfully

Now that you know how serious breaching your contract can be, it should be clear just how important adding sufficient contingencies to your purchase agreement is. So, what are the ways you can get out of a contract without breaking the law?


In many contracts, sellers will indicate a deadline by which the buyer has to secure financing for the home. If this deadline is not met, the seller can annul the contract.

Sellers are also able to back out of a sales agreement if, following the inspection, the buyer asks for repairs that the seller is not willing to provide. The seller is under no legal obligation to pay for repairs, so they can simply refuse to carry out the requested repairs, prompting the buyer to end the purchase on their own.


Usually, if a buyer lawfully backs out of a purchase agreement it's because something turned up during the home inspection. This is the most common reason for buyers to exit a real estate contract, and in most cases there will be a contingency allowing a buyer to exit if they aren't satisfied with the inspection's results.

Other common reasons for a buyer to walk from a purchase include being unable to secure financing, the results of a title survey, and an unexpected appraisal value. As long as these were clearly outlined in the contract, there should be no issues canceling the sale for any of these reasons.

In the end, the best way to avoid having to figure out how to get out of a contract is to make the right choice in the first place. That's where real estate agents come in: they can help ensure that the buying and selling process go so smoothly that you won't even think about backing out of the deal. When it comes to navigating the home buying or selling process, a good real estate agent can save you from some major headaches down the line.

Are you ready to buy or sell your house? If so, Clever can help. To learn more about how a Clever Partner agent can help you sell your house, click here to get in touch with one of our Partner Agents. If you're a buyer, click here if you'd like to get in contact with an experienced Partner Agent.


Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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