Backing Out of an Assignment Deal – Advice?

[Mike Romano]

Hey everyone, I'm looking for some insight. I have an assignment deal that I'm considering backing out of before closing.( I'm the end buyer) The title company already has my $5K EMD. I just found out the property is in a Zone A flood area, which means lower property values and a longer selling timeline.

At this point, I’d rather take the $5K loss than deal with the potential headaches. Has anyone been in a similar situation? How did you handle it? Appreciate any advice!

[Kevin Sobilo]

@Mike Romano, you have to look at your contract. You want to make sure the $5k is the only money you will owe. Some sales contract's don't limit the seller to retaining the $5k EMD, they can also seek liquidated damages in addition. For example, they could seek lost rent until they get another deal done. It all depends on the contract.

Since it sounds like you are working without a real estate agent, I would contact a lawyer to review the contract and help you notify the seller's side correctly to terminate the contract and release the EMD.

In the future, you might want to use an agent or lawyer when entering deals like this. Many contracts allow for the buyer to do some due diligence that could include things like inspections, zoning, whether the property is insurable, etc. If this had been in your contract and you discovered the issue during the due diligence period you could have been terminating the contract and getting back that $5k EMD.