When selling a home, it is very important to exercise caution when accepting and signing a written purchase offer. This is a legally binding contract. There are serious consequences, which may include financial damages, for backing out of the deal.
Why would a seller want to back out of a deal to sell a home?
Life can take some surprising turns. The most common reason that a seller wants to back out of a deal is that after accepting one offer, a better offer comes from another buyer. This is a greedy reason. Most buyers will not accept this reason easily.
Unless the seller can create a situation that causes the buyer to back out of the existing deal, taking another offer just because it is at a higher price is going to require compensating the buyer under the purchase agreement. Breaking a contract without compensating the damaged party will likely result in a lawsuit.
Another reason that a seller may want to back out of a deal is that some personal circumstances change.
Imagine that the house was put up for sale because the couple that owned it is getting divorced, and they change their mind, calling off the divorce process. Perhaps, they want to keep the home while they try to rebuild their marriage.
The buyer who signed the purchase agreement may be more sympathetic if the cancellation is not for a financial reason.
How to Back Out of the Deal
There is no penalty for backing out of a deal before signing the purchase agreement.
No matter if the reason is financial or personal, here are some ways to back out of a real estate deal in Toronto when the purchase agreement is already signed:
1. Tell the buyer your attorney does not approve of the agreement. Usually, most people will accept the need for an attorney review with a review period of three to five business days.
2. If the purchase agreement has a cooling-off period, you can cancel the deal quickly during the cooling-off period. A cooling-off period is allowed under Canadian law to be in a purchase agreement and is required to be 10 days for the purchase of a newly constructed condominium.
3. Be open, honest, and tell the buyer you changed your mind.
4. Rely on contingencies in the purchase agreement. Common contingencies for the seller’s side are the need to be able to buy another home before selling the existing one. On the buyer’s side contingencies are passing inspections and getting financing, which may come up in any deal to block it.
5. Offering to pay compensation to the buyer for breaking the agreement is one of the strongest ways to back out of a real estate deal in Toronto.
Only use these ways to back out of a real estate deal in Toronto when necessary because there is a strong chance of creating a legal liability and the risk of being sued for damages by the aggrieved party.
If the buyer agrees to accept the cancellation of the deal, make sure to prepare and sign a written cancellation document that states the purchase agreement made on a certain date between the named parties is null, void, and of no further effect.
How to Back Out of a Real Estate Deal as a Seller https://www.trulia.com/guides/how-to-back-out-of-a-real-estate-deal-as-a-seller/