| A real estate sale is usually initiated by an offer | | | | by inspections. It is crucial to get inspections done, |
| from the buyer to the seller, written on a real | | | | deliver repair requests, and negotiate contract |
| estate contract form, and backed by a monetary | | | | amendments, or, if necessary, terminate the |
| deposit. If the seller accepts the offer, the buyer | | | | contract, all within the time guidelines set by the |
| and the seller are bound by a legally binding | | | | contract.Contingency for Sale of Other PropertyIn |
| contract. While the forms vary by locality, the | | | | some cases the buyer may have a contingency |
| essential terms include the offer amount, legal | | | | for the sale of a certain property, usually the |
| description, names of the parties, and date of | | | | buyer's current home. If this property does not |
| closing. In addition to these terms, the contract | | | | close by a certain date, the buyer may have to |
| interweaves numerous contingencies, disclosures | | | | terminate. As with other termination procedures, |
| of information, and procedures that dictate | | | | giving notice to the seller within the required time |
| responsibilities of buyer and seller. The contract is | | | | is critical. By allowing this type of contingency the |
| the road map that takes you all the way through | | | | seller has accepted the risk that the contract |
| to closing. It is very important to understand its | | | | may not close.Lead Paint ContingencyFederal law |
| terms and follow them carefully. If it becomes | | | | requires that sellers of homes built prior to 1978 |
| necessary to terminate the contract, your close | | | | notify the buyer of any knowledge or inspections |
| adherence to contract terms and procedures is | | | | that they may have regarding lead paint. The |
| critical.Loan ContingencyYour contract may contain | | | | buyers are allowed a period of time to review |
| a provision that the buyer must be approved for | | | | materials and conduct their own inspections. If |
| a specific mortgage loan and interest rate. If the | | | | lead paint is found, the buyer may terminate the |
| mortgage cannot be obtained within the | | | | contract within the prescribed time frame.We |
| prescribed time, the buyer may terminate the | | | | have touched on the most common termination |
| contract and receive a refund of deposit. If it | | | | clauses in standard real estate contracts in Texas. |
| becomes necessary to terminate under this | | | | Contracts used in other states, or provided by |
| contingency, you should be prepared to document | | | | builders for new homes, or written by an |
| that you took prompt action to obtain the loan, | | | | attorney for a particular transaction will vary |
| received a written rejection, and gave notice to | | | | greatly in the contingencies and terminations |
| the seller within the time limit set by the | | | | clauses included. In addition, there may be ways |
| contract.Termination based on credit disapproval is | | | | to terminate your particular contract, other than |
| likely to cause anger and disappointment on the | | | | through contingency clauses.The important thing |
| part of the seller. The seller may feel that he has | | | | to remember is that the contract of sale is of |
| been misled into signing a contract with an | | | | primary importance to the real estate transaction. |
| unqualified buyer. When anger and strong | | | | If you follow the terms of the contract and act |
| emotions enter into the transaction they may | | | | within time limits, you may exercise the |
| lead to difficulty in resolving the termination.Title | | | | termination rights that the contract contains. If |
| and Survey ReviewContracts usually provide a | | | | you fail to follow the terms, most contracts state |
| title review period for the buyer. The buyer may | | | | that you have waived the right to terminate.After |
| object in writing to defects noted in the title | | | | you have given the seller notice of termination, |
| documents. If title defects cannot be cured, you | | | | two closely related steps must follow: The parties |
| have the right to terminate.In the same vein, the | | | | must formally terminate the contract, and the |
| buyer usually has the right to review a survey of | | | | earnest money deposit must be released. If the |
| the property. If construction is found to overlap | | | | buyer and seller agree to the termination, their |
| building lines, or if there are encroachments on the | | | | agreement is usually formalized by signing a |
| property, you may choose to terminate your | | | | termination form. In Texas we have an "earnest |
| contract. | | | | money release" form that handles both steps - it |
| It is worthwhile to promptly consult an attorney | | | | releases the parties from further obligations under |
| if you have some concerns about the title | | | | the contract, and instructs the escrow company |
| documents or survey. Your objection to title or | | | | to give the deposit to one party or the other. It |
| survey problems must be made in writing within | | | | is usually in the best interest of all parties to |
| the time frame allowed by the contract.Review of | | | | resolve the earnest money and contract |
| Seller's DisclosureIn Texas, sellers (with some | | | | termination issues as soon as possible.If the buyer |
| exceptions) are required by law to provide a | | | | and seller cannot agree that the contract is |
| seller's disclosure notice to the buyer. On this | | | | terminated, the matter could lead to prolonged |
| form, the seller answers questions and provides | | | | negotiation and possibly, litigation. In most cases, it |
| information about the property. If the buyer | | | | is in the seller's best interest to have formal |
| receives the form after the contract has been | | | | termination of the contract, freeing him to put the |
| created, he may terminate the contract within a | | | | property back on the market. However, |
| certain number of days after receiving the seller's | | | | occasionally, even when it is clear that the buyer |
| disclosure. The receipt date of the disclosure | | | | has followed contract procedures, the seller may |
| should be documented in order to establish the | | | | prolong the formal termination process. The seller |
| start date of the review period. Be careful to | | | | may want to receive compensation from the |
| avoid confusion about when a time period starts | | | | buyer for the delay in selling the property. Buyer |
| running.Mandatory HOA ReviewIn areas where | | | | and seller may have conflicting points of view of |
| there is a mandatory homeowners association, | | | | the issue. The non- settlement of termination |
| the Texas contract allows the buyer a period of | | | | issues can result in additional time and money, and |
| time to review Subdivision Information. This | | | | cause unwanted stress.Most buyers do not enter |
| information is normally supplied by the HOA | | | | a real estate contract with the intention of |
| manager after the contract is created. After | | | | terminating. However, buyers must not take for |
| receipt, the buyer has the right to review the | | | | granted that all will go as expected. If a |
| documents, and possibly terminate the contract. | | | | contingency date lapses, you will lose the benefit |
| Again, the termination notice must be given within | | | | and protection of the contingency. A good |
| the time limits in the contract.Inspection | | | | Realtor, in addition to helping you find the |
| ContingencyContract procedures to allow the | | | | property, can be invaluable in helping you to meet |
| buyer to conduct inspections of the property | | | | your obligations under the contract and, if |
| vary from region to region. In some areas, the | | | | necessary, exercise your right to |
| buyer may terminate if repairs exceed a | | | | terminate.Disclaimer: This article is provided as a |
| pre-agreed dollar amount, and seller declines to | | | | service to the public. Nothing in this article is |
| make the additional repairs. In Texas, the buyer is | | | | intended to serve as legal advice, or as a |
| allowed an "option period," during which time he | | | | substitute for legal advice tailored to your specific |
| has the unrestricted right to terminate the | | | | situation and jurisdiction. If you have a question |
| contract. Inspections are done within the option | | | | about an issue discussed in this article, you should |
| period.Inspection issues are the most common | | | | consult an attorney directly.Roselind Hejl is a |
| reason for contract termination. During the | | | | Realtor with Coldwell Banker United in Austin, |
| inspection period, there is usually some | | | | Texas. Her website - - offers homes for sale, |
| re-negotiation of the price or terms in order to | | | | market trends, buyer and seller guides. |
| resolve repair issues that have been brought up | | | | |