Can I cancel a house purchase agreement after the inspection?
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Can I cancel a house purchase agreement after the inspection?
We signed a house purchase agreement. We did the inspection and it was fine and our loan processing was fine also. At such point we decided that this is the wrong house for us. WWe sent a cancellation for the purchase agreement and we know that we will loss the earnest money ($1000). The seller refused to sign the cancellation. Does he has the right to do that and what else he has the right to ask for rather than the earnest money?
Asked on March 24, 2012 under Real Estate Law, Minnesota
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Potentially, the seller could sue you for much more--certainly for the costs he expended in reliance on the contract (such as, for example, legal fees; anything he may owe the realtor; storage costs if he put his belongings in storage; his own costs if after "selling" his home to you, he rented or bought another dwelling himself). Basically, the seller can seek recover of any costs or losses flowing out of your breach of contract, up to, in some cases--such as in stagnant home market, when it is difficult to sell homes--carrying costs for being saddled with the home longer (e.g. taxes, mortgage) and any dimunition or difference in sale price is he later sells the home for less than you had offered.
Of course, if the home sale contract states that if you cancel in the way that you did, your only liability would be the loss of yoru earnest money, that would be different; such a limitation on liability would be enforceable.
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