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Can I Still Back Out of My NJ Real Estate Contract?

For good reason, it is challenging to get out of a NJ real estate contract, but it's not impossible. Here, we will look at several legitimate reasons to end a legally binding real estate contract.

On Behalf of Veitengruber Law | Sep 08,2023

Real estate transactions involve highly complex legal and financial maneuvering on behalf of the buyer and the seller. Because of this intricacy, almost all real estate transactions involve a real estate contract. The contract is a binding legal agreement signed by both parties indicating the specific terms of the transaction. A valid contract is required to ensure that both individuals are aware of their responsibilities and rights throughout the transaction.

Most real estate contracts will include the following:

  1. Identification of involved parties
  2. A description of the property and its location
  3. The agreed-upon price of sale
  4. Essential terms, rights, and obligations of the parties in the contract
  5. Contingencies
  6. An up-to-date description of the condition of the property
  7. A list of fixtures, appliances, or furniture included in the sale of the property
  8. The amount for the earnest money deposit
  9. Itemized closing costs for the buyer and seller
  10. Estimated date of closing
  11. Terms of possession (when the keys will transfer)
  12. Signatures of each party

Once a contract has been signed, it is legally binding, and both parties will be held to the terms of the agreement. Breaching this contract can have serious legal repercussions for the party in breach. Going against a contract is rarely in your best interest. On the other hand, it is challenging to get out of a contract. The law backs up these legally binding agreements. There are a few ways to get out of a real estate contract after it has been signed - but be sure you have an experienced New Jersey real estate attorney to help you.

1. Attorney Review Period

In New Jersey, once both parties sign the real estate contract, the clock starts on the three-day attorney review period. During this time, a real estate attorney can review the document and advise their client of potential problems or additions that could help protect their client throughout the transaction. Even if your real estate contract looks standard and correct, getting the second opinion of an experienced real estate attorney is still worth it.

If the attorney advises some changes to be made to the contract, the changes must be accepted by both parties to move forward. If an attorney suggests that the agreement contains significant flaws, it is within the right of the client to cancel the contract before the end of the attorney review period. Once the attorney review period is over, the contract is solidified, and you lose the opportunity to back out of the contract through the attorney review period. If you've passed this time period and still need to back out, keep reading.

2. Failure to Fulfill Obligations

Most real estate contracts will include deadlines and commitments that have to be met by the buyer or seller throughout the real estate transaction process. These dates and conditions must be completed for the contract to remain valid. In most cases, a seller or buyer will not cancel a contract over a commitment that is a few days late. But if you are looking for a way out of a contract, this is one way to do so. For example, the contract states that the buyer must secure funding by a specified date. The date comes and goes with no proof of funding. The seller is then within their rights to end the contract. This can apply to any terms with deadlines in the contract.

3. Unfulfilled Contingencies

Contingencies are the more nuanced items in a real estate contract that are not standardly included but have been added because of their significance to one or both parties. These conditions must be agreed upon and met during the transaction for the sale to go through. Most real estate professionals will include the common contingencies in their boilerplate contract templates. Still, if the listed contingencies do not cover something that is important to you, you should insist on the inclusion of these terms before signing.

Once a contract is signed and the contingencies listed are agreed upon, they are legally binding. So, for example, if the seller added the contingency that they needed to successfully purchase a new home in order for the sale of their old home to go through, this contingency would need to be met for the deal to continue. Any contingency that is not met can mean the dissolution of the contract.

Another common contingency involves the home inspection. Home inspections are a critical aspect of purchasing a home. If a home inspection uncovers major issues with the property that were not previously disclosed, the buyer has the right to back out of the deal as long as there is a home inspection contingency in place.

4. Scams

Very rarely, you may need to back out of a real estate contract because you have discovered the transaction is actually a scam. Although rare, real estate scams can unfortunately occur. Working with experienced real estate professionals, like an experienced local agent or a trustworthy real estate attorney, can help prevent you from entering into binding contracts with scammers. But, if this happens, you have the right to break this contract without legal repercussions. If the seller or buyer entered into the agreement with nefarious intentions, you can withdraw from the contract legally. You will need to provide proof of the scam to protect yourself legally, but an attorney can help you with that. Even if the scammer tries to threaten legal repercussions for breaking the contract, as long as you have proof, they will not have the law on their side.

While backing out of a real estate contract can be difficult, it is not uncommon. Many things can happen that would require the buyer, seller, or both to regret making a deal. Unexpected life events, a concerning home inspection, or even an emotional attachment to a property can all be valid sources of indecision when it comes to a real estate transaction. Veitengruber Law is a full-service New Jersey real estate firm with the experience and knowledge to help you protect your investment.



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