Can Buyer Terminate Real Estate Contract after Due Diligence Period

When buyers enter into a real estate contract, there are a number of important provisions to consider. Aside from the purchase price and closing date, the due diligence period is perhaps one of the most critical. This period of time allows the buyer to investigate the condition of the property and make sure they are satisfied with their investment.

But what happens if, after the due diligence period, the buyer wants to terminate the contract? Can they do so, or are they obligated to move forward with the purchase?

The answer is, as with many legal questions, “it depends.” The terms of the contract will dictate the rights and obligations of each party, so it is important to review the language carefully.

However, in general, there are a few reasons why a buyer may be able to terminate a real estate contract after the due diligence period:

1. Failure to disclose important information: If the seller failed to disclose important information about the property that would have affected the buyer’s decision to purchase, the buyer may be able to terminate the contract. This could include things like known defects, zoning issues, or past flooding.

2. Failed inspections: If the buyer discovers, during the due diligence period, that the property has serious issues that were not disclosed, they may be able to terminate the contract. This could include problems with the roof, foundation, or major systems like plumbing and electrical.

3. Failure to secure financing: If the buyer is unable to secure financing to purchase the property, they may be able to terminate the contract. However, this would typically need to be spelled out in the contract itself.

It is important to note that if the contract does not provide a specific reason for termination, the buyer may still be able to terminate the contract under the principle of “impossibility.” This means that something has occurred that makes it impossible for the buyer to perform under the contract, such as a change in laws or regulations that affects the property.

In any case, if a buyer wishes to terminate a real estate contract after the due diligence period, they should consult with a real estate attorney to review the contract and determine their rights and obligations. It is also important to communicate clearly and promptly with the seller to avoid any misunderstandings or disputes. With careful planning and attention to detail, buyers can protect their interests and make informed decisions when purchasing real estate.