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Friday, January 25, 2019

Can I Terminate My Real Estate Contract and Keep My Deposit?

It’s not uncommon for a buyer to back out of a real estate contract. However, breaking a contract can have negative consequences, including the loss of one’s deposit. Luckily, though, there are circumstances under which a buyer may break a real estate contract and keep his or her deposit. If you are considering breaking a real estate contract in Connecticut, below are two standard contractual contingencies that may allow you to keep your deposit.   

Mortgage date contingency 

Most real estate purchase contracts contain a date by which the buyer may secure a mortgage commitment. If the buyer is unable to secure funding for the purchase, he or she may terminate the contract and keep his or her deposit by providing notice to the seller. This date is negotiated by the parties during the drafting of the purchase contract. If a buyer fails to obtain financing but doesn’t provide notice to the seller by the chosen date, then the contract will remain in effect, resulting in the loss of his or her deposit. Therefore, it’s imperative that all purchasers of real estate in Connecticut remain aware of this date. 

Home inspection contingency 

Another way in which a buyer may terminate a real estate contract and keep his or her deposit is a failed home inspection. Real estate contracts typically afford purchasers the right to conduct a home inspection within 14 days of a seller’s acceptance of an offer. During this period, a buyer must conduct a home inspection and notify the seller of any problems discovered by the inspection. Common inspection items include:

  • Electric system
  • Plumbing
  • Structure 
  • Radon 
  • Termites 
  • Mold
  • Mildew

If any issues are discovered during the inspection, the buyer must notify the seller of the deficiencies within a specific amount of time and propose specific remedial measures. Like the mortgage date contingency, the date specified in the contract is firm, and a failure on the part of the buyer to report on time can result in a lost deposit. Following notification to the seller, he or she must respond to the buyer’s requests. The seller may choose to accept all of the buyer’s suggestions, accept some of them, or refuse them all. If the buyer and seller are unable to agree on a resolution to the deficiencies within the time detailed in the contract, either party may terminate the contract, and the seller will return the buyer’s deposit.

Connecticut Real Estate Attorney

Real estate transactions, whether residential or commercial, can be complicated, so it’s important to enlist the help of an experienced Connecticut real estate attorney to assist you. At the Law Office of Benjamin S. Proto, Jr., our experienced Connecticut real estate professionals keep both buyers and sellers apprised of their rights and duties while providing valuable legal advice. If you are interested in buying or selling real estate in Connecticut, please contact us for a free consultation.

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