Can I back out of my contract?

Question

On Thursday, I executed a contract for the sale of my rehab using a standard TREC 1-4 unit purchase agreement.   They had it inspected the next day, and relayed some concerns about the roof and plumbing, which is a segue to a repair amendment that's going to cost more money.   The contract calls for escrow to be submitted pretty much w/ the contract (it's a little vague) and for option money to be submitted within 3 days, which is today.

Yesterday, I received an offer which is worth about $10K more and is cleaner.   I'd prefer to take this contract, but I want to do the right thing and be ethical.    Do I have a legal right to cancel the contract based on now getting escrow $$$ yet?    I believe there will be no option if not received today.

Chris Soignier · Answer

@Bryan Otteson, the TREC contract specifies, "Upon execution of this contract by all parties, Buyer shall deposit $x,xxx as earnest money with _______________ (as escrow agent)....If Buyer fails to deposit the earnest money as required by this contract, Buyer will be in default.

Today is 4 days following execution, and neither the earnest nor option money has been received.   Option money is due 3 days from execution, so there technically is no option on the contract. (though I realize there are other ways to weasel out of a contract prior to closing).    The agent was in Vegas this weekend, but to the best of my knowledge that doesn't provide for an adjustment to any deadlines.   ;)

Meanwhile, the other offer is being submitted as a backup, and to strengthen it they're changing the repair language to "as-is, where-is, with no seller repairs".

Tzvi Balsam · Answer

@Chris Soignier Talk to your attorney.

Chris Soignier · Answer

@Wayne Brooks, the earnest money is not spelled out in days, I posted the exact language above.   I interpret it to mean same day, others might not.    Everything else is spelled out clearly w/ respect to timelines.

Bryan O. · Answer

@Chris Soignier if you are using a standard contract you should have somewhere that "time is of the essence" and what the earnest money deadline is. If that deadline is missed you have the option to cancel.

Chris Soignier · Answer

I certainly don't want to explore any grey areas or motivate someone to sue me, regardless of my innocence.    I decided to stick w/ the original contract, and am taking the other offer as a backup.   This will certainly strengthen my negotiating position w/ the current contract when it comes to repairs.

Matthew Kreitzer · Answer

It is a little unclear what exactly is going on based on the timeline, but the law of contracts is rather complex. There are indeed times in which a person's non-performance of contract is excused in common law, but that is subject to local court cases that modify the doctrine. For more information, you must seek out a local Real Estate litigation attorney to determine when you are allowed to not perform under a contract. Talk to an attorney prior to making any move. Failure to do so could result in significant damages from a lawsuit.

Jay Hinrichs · Answer

well if they hit you with a repair addendum you can not accept it and cancel.

if they are not timely with their deposit you can cancel.

the only way I would think your obligated to this buyer is if they follow the contract and do not ask for any concessions and move to  close.

pretty standard stuff your an agent I see so I would think you might have been through this before with other clients of yours..

Its business and contracts are what dictate the business I would not look at it past that.