What is the legality of backing out after signing an agreement?

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What is the legality of backing out after signing an agreement?

I’m in a process of buying a house. Our offer was accepted and sign the agreement. We haven’t scheduled for inspection and haven’t wire down

payment yet but are expected to do soon. We are pre-qualified but the mortgage loan qualification is in process, collecting a few more documents. Is it too late to back down? What will happen to earnest money when we haven’t paid yet.

Asked on May 21, 2018 under Real Estate Law, Minnesota

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Yes, it is too late to back out: once you sign, you are obligated. The fact that you have not scheduled the inspection or wired the down payment yet does not alter your contractual obligations. At a minimum, if you elect to "back out" of the contract, you will owe an amount equal to the earnest money or deposit and could be sued for it if you do not voluntarily pay it; if your backout out somehow causes them to suffer losses or incur costs in excess of the amount of the earnest money, they may be able to sue you for that additional amount to, so long as the terms of the contract do not limit them to the earnest money.


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