Can one back out after contingency removal have been signed on home purchase without penalty?

Question

Hypothetically, if you sign the removal of all contingencies, can you still back out of the deal at the last minute? For example, what if the loan gets pulled at the last minute and you already signed off on all contingencies the day before? Or, what if you don't have a loan contingency but you signed off on the Home inspection contingency and for whatever reason, something comes up at the last minute and you can't go through with the purchase?

This is hypothetical. My loan wasn't pulled. But my realtor asked me to sign off on all contingencies. The loan docs have gone to the Title company and only thing left for us to do is to sign all the docs next monday to close escrow. I'm just wondering what would happen if we signed off on all contingencies before we have the keys in our hand. Couldn't the lender still pull the plug at the last second as they're handing over the keys?

Answer 1

If you signed off on ALL contingencies, including financing, and THEN your loan gets pulled, then you have not only lost your earnest money, you are at risk for being sued for specific performance, and commission from BOTH Realtors.

NEVER sign off on a financing, appraisal, or inspection contingency unless you are FULLY prepared to buy the house anyway and have the means to do so.

Sorry, but a contract, is a contract.

PS: I am curious as to what happened that your loan was denied at the last minute....very rarely is it something that the borrower wasn't aware of was a possibility. They HAD to give you a reason.

Answer 2

Once the contingencies are removed, you've bought yourself a house.

But if the loan is "pulled" (I'm assuming you mean the lender isn't going to go through with it), that contingency would still be there.

If you need a loan to buy the property, you wouldn't want to have a contract without a loan contingency.

Answer 3

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Answer 4

Once you have signed off (removed) all of your contingencies, you then have a clear and binding contract to purchase the property. At that stage, you can no longer back out without penalty and possible litigation.