Question about contingencies

[Derrick Strope]

One part of the contracting process that I am not terribly sure I completely understand is the use of contingencies.  Of course, I never want something like this to happen but lets say I land myself in an unfortunate scenario where my repair costs were underestimated and I am unable to source a buyer for a property.

Assuming I put a thousand into escrow for earnest money and I had a inspection contingency in my contract - how do I exit the deal if we are unable to negotiate any further?

Will an addendum need to be signed by both the seller and myself? How do I officially release any liabilities of myself from a P&S should my contingencies not be met? Does this need to be filed anywhere or do I just contact escrow and notify them I am no longer interested in the property due to X reason.

I did some searching on this but did not locate anything that clarified the answer for me.

[Will Barnard]

If within your contingency time frame you choose not to go through with the purchase (reason must be part of your specific contingency or contingencies), you may cancel the purchase and be legally entitled to your EMD (assuming your contract does not stipulate otherwise. To get said EMD from escrow, the seller must execute a document releasing said funds in order for escrow to release them back to you. If however the seller does not sign and you are within your contractual right to receive it back, the seller can be sued for damages, including, but not limited to attorneys fees and court costs.

Typically, the threat of such action usually persuades the other party to act according to the contract. This is not legal advice and I am not an attorney. Each state has its own laws, including specific contract law. 

In TX, the purchase and sales agreement offers the buyers an ability to put up a small additional and non refundable amount (usually $100 or less) for 10 days of non explained contingency, in other words, you don't need any specific reason as to why you will not purchase the property. Your EMD is returned but you lose the $100 (or whichever amount you paid in the contract)