When Can You Back Out of Buying a House?

To initiate the process of buying a house, you submit a written offer to the seller. The offer becomes a legal and binding sales contract when the seller accepts your offer and signs it. Generally speaking, this means that you are obligated to buy the house. However, real estate contracts provide for a few contingencies -- items in the contract that must be satisfied by a certain date -- that allow you to walk away from a buying a house if necessary.

When Your Financing Falls Through

A seller usually requires you to submit a copy of your mortgage pre-approval letter before she'll accept your initial offer to buy her house. Furthermore, your offer will have stated your intention to seek loan approval before a certain date. However, unforeseen circumstances, such as sudden loss of employment, could cause your loan to be turned down even if you were pre-approved. As long as the loan application falls through before the financing contingency expires, you can back out of the sale without losing your deposit.

When the Home Inspection Reveals Problems

Unless you waive your right to a home inspection, you can back out of the deal depending on the inspector's findings. For example, you don't have to buy the house if a home inspection reveals major plumbing problems, and you don't have the time or money to oversee a major home repair job. The number of days you get to conduct a home inspection and proceed or back out of the sale varies by state.

After Reviewing Homeowner's Association Disclosures

If you are buying a house in a condominium or homeowner's association, you have the right to review the association's rules before proceeding with the sale. Upon reviewing the disclosures -- which the seller must give you -- you can cancel the sale without penalty. For example, if you wish to plant rose bushes in your yard and the association's rules prohibit owners from unauthorized landscaping, you can back out of the contract within the time frame allowed for the contingency.

Other Contingencies

You can also write-in a home sale contingency that allows you to sell your old house before buying the new one. If the sale of your old house falls through, you can back out of buying the new house. Other contingencies beyond your control include the appraisal and title search. If a home appraises below the agreed-upon sales price, you can get out of the contract if the seller doesn't lower the price. If a title search reveals a lien that belongs to the current seller, you are not legally obligated to proceed with the sale if the seller refuses to settle her debt.