*Pardon me while I step onto my soap box*
Forfeiting your earnest money does not allow you to terminate the contract.
Again, the contract does not say that for any reason you cannot terminate a contract, give the seller your earnest money, and wipe your hands clean. We have no idea where this myth started, but it simply is not true!
…at least not in St. Louis.
Perhaps it’s because on occasion in the real world, it works out this way. But in contract world, it isn’t there!
In the Residential Sale Contract provided by the St. Louis Association of Realtors®, there are multiple reasons in which a buyer has a right to terminate the contract – and even be returned their earnest money! Think inspection phase, loan contingency and title issues, most commonly. However, there is no line in the contract that says a buyer can simply change their mind at the expense of giving up the earnest money. In fact, the contract actually says quite the opposite.
When you are offered contractual documents to sign in real estate, please, please, PLEASE ensure your understanding. Ask questions of your hired professional prior to signing on the dotted line! We LOVE questions – it lets us show off how much we know about this stuff 🙂 When you write an offer, you are signing a legally binding obligation – an exciting one – but an obligation, nonetheless.
- Getting cold feet,
- Changing your mind’, OR
- Your mom doesn’t approve
…simply are not valid reasons to terminate a contract. Period.
Do these things happen? Absolutely. And we handle them on a case by case basis as best as we are able. Sometimes, a seller might even be willing to work with you for a cordial monetary settlement. However, it should not be assumed that these things can allow you to terminate a contract without any damage.
*Stepping off the box*