Can a buyer back out of a signed contract because the appraissal comes in for an amount lower than he agreed to pay?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Can a buyer back out of a signed contract because the appraissal comes in for an amount lower than he agreed to pay?
Asked on February 11, 2017 under Real Estate Law, California
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
It depends. Was the contract written with an "apparaisal contingency", meaning that the buyer does not have to purchase the home unless it appraises for at least the sales price? If so, then they can get out of the contract. However, if the appraisal contingency was removed, then they are bound to go forward with the purchase. If the appraisal contingency is still in the contract but has a “cap” (ie: the buyer has agreed to pay a set amount above the appraisal value if the value comes in below the purchase privce), then the sales price would be the appraisal value plus the cap. For example, if the sales price is $400,000, and in the contract the buyer has agreed to pay up to $15,000 over the appraisal price up to the contract price of $400,000”, then if the appraisal price comes in at $375,000, then the sales price would be $390,000 ($375,000plus the $105,000 cap). If the appraisal value came in at $395,000, the buyer would only have to pay $5,000, since that’s all they would need to do to remain with the $400,000 sales price.
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 AttorneyPages.com 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.