Can buyer back out of the escrow of commercial property after signing?

UPDATED: Oct 1, 2022

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Can buyer back out of the escrow of commercial property after signing?

He already signed on escrow papers however, I am waiting for inventory
document and then sign. Now, he wants to back out. Can he do that?

Asked on September 18, 2017 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

He can only back out if one of the following three things occured:
1) The contract itself lets him back out: that is, there is some term or provision in the contract that lets him void or terminate it without penalty at this time, and he complies with its provisions.
2) You breach some material (important) term of the contract: one party's material breach allows the other party to treat the contract as terminated.
3) You committed fraud by knowingly or intentionally misrepresenting (lying) to the other party to get them to enter into the transaction, and they reasonably relied on that misrepresentation: fraud provides a basis for recinding a contract.
Apart from the above, he can only get out in very unusual, but fairly obvious, circumtances: e.g. he was mentally incompetent when he signed the contract; the government passes a law making the contract illegal; etc. Otherwise, he is bound and must escrow.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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