Grounds for voiding a real estate contract

by | Jul 22, 2021 | Real estate disputes |

Buying and selling commercial and residential real estate are often large, complicated and expensive transactions. With all that’s at stake, the seller and buyer will want to be sure that it is the right deal. No one wants buyer’s or seller’s remorse. Fortunately, there are several steps involved in any real estate transaction. These agreed-upon steps are outlined in the initial contract. There will be language regarding the potential deal, and it will likely offer reasons for modifying the agreement or voiding it all together at some point before the closing.

Why deals fall apart

Real estate transactions unravel for many different reasons:

  1. Title: The owner may not be able to transfer the title because it has a lien against it or does not possess a legal title.
  2. Contingency: Contacts often have conditions to be met before the transaction moves forward. Examples include a failed inspection by an engineer or expert or discovering a legal issue or fundamental flaw that impacts its value to the buyer.
  3. Financing: The bank or mortgage company must agree to the sale price before lending the money.
  4. Disclosure: The seller is obligated to divulge all known information on the property disclosure form regarding the property’s status or condition, including the potential for flooding, cracks in the foundation or other structural issues.
  5. Human error: People make innocent mistakes, and these can often get fixed. However, the error may be a red flag that causes one to back away from the deal. For example, there may be potential for eminent domain claims at the federal, state or local level.
  6. Grace period: Many agreements have a time period baked into them where the buyer or seller can walk away without penalty.

Good for both the buyer and seller


Few real estate deals are straightforward, so the two parties will likely encounter some hurdles. It can lead to frustration, but it ensures that the buyer gets what they paid for. Contracts can also protect sellers from lawsuits if the buyer has groundless regrets about the deal.