Q: We signed housing contract on Monday escrow opened and on Wednesday night we realized we made a big mistake.
How can we back out of this contract?
“A big mistake” could mean many things.
Generally speaking, if the Seller has breached the contract, the Buyer has three options: (1) finding a loophole in the contract to walk away; (2) suing for damages in an action for breach of contract; and/or (3) filing a lawsuit for specific performance.
First, real-estate purchase contracts contain various contingencies, which if not met, allow the Buyer to cancel the agreement. For example, some contracts include a contingency that the property appraise for no less than the purchase price. If the property fails to appraise, the Buyer may be able to cancel.
Second, the Buyer may be able to recover damages, including expenses, based upon either a liquidated damages clause or California Civil Code sections 3300 and 3306.
Third, the Buyer may be able to force the Seller to complete the transaction. (However, this option does not seem to be applicable to your situation.)
Separately, if the Seller lied about the property or failed to disclose required information, you may have tort and/or statutory remedies as well.
Obviously, every case, like every price of property, is different, and you should quickly seek representation from a competent attorney.
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