Consider reading through the contract to make yourself aware of different terms and conditions. Without reviewing the contract, you will not be able to determine your rights. A real estate binding is likely to state any applicable unforeseen events as well as the start and closing date. Examples of unforeseen events include buyers’ ability to secure a mortgage on the house. Painting, moulding and random inspections are some of the other contingencies that may be involved depending on the state you are living in.
It is recommended to cancel the contract before the contingency date arrives. If you were unable to secure a loan for your desired contract or the inspections results were announced against you, then you will have the legal right to back out of the contract.
It is best inform your real estate agent as soon as you decide to end your real estate contract. The real estate agent you hired should be given enough time to make the necessary arrangements. It is your moral and legal responsibility to inform your agent about any complications you are facing beforehand.
As discussed before, it is best to cancel the contract after the contingency date lapses. You could end up facing a lawsuit, which could be avoided by paying the deposit amount to the seller.
If you are the seller then you should also inform your real estate agent as soon as you reach the decision of cancelling the contract. Always return the escrow money to avoid legal actions. You will also be required to compensate the buyer for any expenses including the application fees.