Real Estate Contract Cancellation Procedures


Offers to purchase real estate are often written on a standard real estate contract form and accompanied by a down payment. If the seller accepts the offer, a binding contract will exist between the buyer and the seller. The essentials of an offer are the amount being offered, the property’s legal description, the parties’ names, and the closing date. In addition to these provisions, the contract contains many if/then statements, information disclosures, and procedures that establish the duties of the buyer and the seller. The terms of the agreement serve as a guide from the initial meeting to the final signature at closing. Comprehending its stipulations and adhering to them strictly is crucial. Your strict adherence to the contract’s terms and procedures will be tested if termination becomes required.

Possibility of a Loan

A mortgage loan and interest rate acceptable to you may be a condition of your sale. If the mortgage is not approved within time, the buyer can cancel the agreement and get their money back. If you need to terminate under this provision, you should be prepared to provide documented evidence of your rapid efforts to secure the loan, your receipt of a formal denial, and your timely notice to the seller.

The seller is likely to feel anger and disappointment if the sale is terminated due to credit being declined. The vendor may handle duped into doing business with an unqualified purchaser. Irritation and other strong emotions might complicate the transaction, making it harder to resolve the termination.

Title and Land Survey Analysis

A buyer’s title review period is typically included in a contract. If the buyer discovers a problem with the title paperwork, they can file a written objection. You can terminate if the title problems cannot be fixed.

The buyer also has the legal right to inspect the property survey. You have the right to cancel the agreement if the construction is discovered to have crossed any building lines or to have encroached upon the property.
If you have any questions concerning the title paperwork or the survey, it is best to speak with an attorney as soon as possible. Within the contract’s specified time, you must submit a written protest to any issues with the title or survey.

Evaluating the Vendor’s Honesty

Except in limited circumstances, all Texas sellers must give buyers a “seller’s disclosure notice.” The vendor completes this form by providing pertinent information and answering questions. Even if the buyer receives the state after the contract has been created, he still has a window (usually a few days) to cancel the deal in response to the seller’s disclosure. The date of disclosure receipt should be recorded to identify the beginning of the review period. Be clear about when a clock starts ticking to avoid any misunderstandings.

HOA Requires a Review

The Texas contract gives the buyer time to evaluate the Subdivision Information in regions with an obligatory homeowners association. The HOA manager generally provides this data after the warranty has been drafted. The purchaser can cancel the agreement after receiving and reviewing the paperwork. Once again, notification of termination must be provided within the time constraints outlined in the contract.

Inspecting if necessary

There is no universally accepted contract wording to accommodate a buyer’s request to perform inspections. If the cost of repairs is going to be more than a certain sum, and the seller is not willing to pay the difference, the buyer may terminate the contract in some regions. During the “option period,” the buyer has the opportunity to cancel the contract without penalty in the state of Texas. Within the time frame of the selection, inspections are performed.

The most prevalent cause of contract termination is failure to pass an inspection. During the inspection period, the price or terms may be renegotiated to address concerns raised by the reviews and make necessary repairs. Timeliness in carrying out inspections, submitting repair requests, negotiating changes to the contract, and, if required, terminating the contract is essential.

The sale of Other Property Is Pending.

The purchase of a home may be subject to the selling of the buyer’s current residence. There may be consequences for the buyer if the closing on this property is delayed. Notifying the seller promptly is crucial, as with other termination methods. The seller is taking a chance by including this clause, increasing the likelihood that the deal won’t go through.

Cases of Lead Paint Emerging

Sellers of homes constructed before 1978 are obligated under federal law to disclose any information obtained through inspections or other means regarding the presence of lead paint. Buyers are given time to perform their checks and go over any paperwork. If lead paint is discovered, the buyer can cancel the contract within the cancellation period.

Standard termination provisions found in Texas real estate contracts have been discussed. Contracts used in other states, those issued by builders for newly constructed homes, and those drafted by an attorney for a specific transaction are likely to contain very different termination and contingency provisions. In addition, your contract may include various exit strategies and stop-for-cause clauses.

The sale contract is the most critical document in any real estate transaction. To exercise your termination rights under the agreement, you must comply with its terms and take the necessary steps within the specified time frame. Most contracts say you have renounced the right to cancel if you fail to comply with the words.

Two procedures must be taken after the termination notification has been provided to the seller. Earnest money must be returned after both parties terminate a contract correctly. If both the buyer and the seller agree to the termination, a termination form should be signed to confirm the agreement. Fortunately, in Lone Star State, we have a handy instrument called an “earnest money release” that accomplishes both goals: it absolves the parties of their contractual responsibilities. It directs the escrow service to release the deposit to the appropriate party. Fast resolution of earnest money and contract cancellation concerns is usually in everyone’s best interest.

If the buyer and seller disagree about whether or not the contract has been ended, the dispute could drag on for a long time in negotiations or perhaps in court. Having the contract formally terminated allows the seller to relist the property for sale, which is usually in the seller’s best interest. However, on rare occasions, the seller may drag out the formal termination process, even though it is evident that the buyer has followed contract terms. If the property sale is delayed, the seller may seek compensation from the buyer. There could be a disagreement in opinion between the buyer and the seller. Termination issues that aren’t resolved can waste time and money and cause unnecessary stress for everyone involved.

Most buyers do not enter into a real estate contract to cancel. However, purchasers should not assume that everything will happen as planned. A contingency will no longer protect you once its expiration date has passed. In addition to finding the perfect home, a Realtor’s assistance in fulfilling your obligations under the contract and, if necessary, terminating it can prove priceless.

This article is presented as a public service. Nothing in this post should be construed as legal advice, and you should not disregard the need for competent local counsel. You should talk to an attorney about your situation if you have any questions about the topics covered here.

In Austin, Texas, Roselind Hejl works as a realtor for Coldwell Banker United. Her website,, features house listings, market stats, and advice for buyers and sellers in the Austin area. Please let Rosalind assist you in relocating to Austin.

Austin, TX Property Resource.

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