32 Loopholes A Buyer Can Use To Cancel A Texas Real Estate Contract
by Eric Peterson
on Monday, December 26th, 2016 at 11:28am.
The contracts we use for Texas real estate are extremely buyer friendly. If you are entering into a real estate transaction it’s important to know about many of the loopholes a buyer can use to terminate a contract and receive a refund of earnest money.
Last week I took a continuing education class about the 32 buyer outs in the Texas real estate contract.
Within our contracts there is typically a termination period of 7-10 days for a buyer to complete their due diligence. Most people assume once that period is over the buyer does not have a way to terminate the contract and receive their earnest money back.
With most contracts that’s not true.
Some of buyer outs are legitimate in my opinion. For example what happens if the home does not appraise for the sales price?
Other buyer outs don’t seem fair to a seller. For example if a home is in a mandatory homeowner’s association the seller generally has to provide information from the HOA.
That information is often provided after the termination period is over. Within our standard contracts the buyer has a period of time to object to any of the HOA information. In effect it gives the buyer a second termination period.
If important information isn’t delivered in a timely manner the buyer may be able to terminate the contract all the way up to closing. Imagine you’ve already packed up your house to move only to find out the buyer can cancel the contract because your listing agent didn’t provide a required form to the buyers?
It’s our job to help our clients write a contract that is more favorable to them.
When buying a home you want a contract written with as many outs as possible. That gives you more flexibility.
When selling your home one of the benefits of working with an experienced Realtor is we can help you close as many of these loopholes as possible. You want to eliminate the chance of a buyer being able to cancel the contract right before closing.