How to Cancel a Home Purchase Agreement in Virginia

Real Estate is a Business of Contracts 
Contracts are serious, complex, legal documents and that's no different when buying or selling a home. In fact, buyers and sellers will be confronted with over 100 legal documents during the process of a typical home purchase and settlement. Canceling a property sale contract in Virginia can only be performed under limited circumstances by buyers, and almost not at all by sellers. Exceptional agents have a thorough knowledge of the contracts and know how to prepare them and manage the process in a manner that protects their client's best interests, money and possible legal complications.

Caveat Emptor = Buyer Beware
Virginia is one of a few states in the U.S. still operating under the common law concept of Caveat Emptor, meaning "Let The Buyer Beware". This places the duty of discovering home conditions and defects on the buyer. Sellers cannot deceive or conceal material defects about their home, but in Virginia, sellers have a very limited obligation when it comes to disclosing anything as required under the Virginia Residential Property Disclosure Act. This is the main reason why buyers have exceptional protection when canceling a home sale contract in Virginia by using a Home Inspection Contingency and disclosure of the HOA/Condo Resale Packet.

When Can a Buyer Cancel a Home Purchase Agreement in Virginia?
When a buyer and seller ratify a contract it becomes a legally binding agreement. Both parties make certain promises to the other in the process of settling the home sale. Essentially, a buyer promises to purchase the home, subject to certain contingencies, while the seller promises to transfer ownership provided the buyer pays the agreed-upon sales price on an agreed-upon date. Nearly all of the performance in the contract rests with the buyer, which is why buyers typically have various time-specific safeguards to unilaterally cancel a real estate contract in Virginia. If a buyer cancels the contract in accordance with a contractual right, then the contract is considered void and the buyer's deposit is returned in full. Most of the cancellation rights available to a buyer are described below.

1. Home Inspection Contingency - If agreed, buyers in Virginia have a right to perform any inspection(s) they wish during the agreed-upon time frame in the contract (typically 5 to 10 days). During this time, buyers can hire professionals to inspect any part of the home. Basically, this is the time for the buyer to become completely comfortable with the home condition. Buyers can cancel a home purchase agreement in Virginia for any reason (or for no reason at all) during the home inspection period, or buyers are free to negotiate repairs with the seller.
   
   
2. HOA/Condo Resale Disclosure Packet - If the property is part of a homeowner's or condominium association, buyers the right to review all the conditions, covenants and restrictions (CCR's) placed on the home by the association. Buyers can cancel the property sale agreement in Virginia for any reason (or for no reason at all) within 3 days of receiving the disclosure packet. Virginia law permits this timeframe to be extended to 7 days if the seller agrees.
   
   
3. Well & Septic Inspection Contingency - If the home is not connected to public water and sewer, then it will have a well for water access and a septic tank for wastewater disposal. Well and septic inspections are performed under a separate agreement than the general home inspection. Buyers can cancel the home purchase agreement in Virginia for any reason (or for no reason at all) in respect to a well inspection and potable water test. Although, the inspector will need to cite some form of repair, maintenance or replacement before the buyer can use the septic inspection to cancel the real estate contract.
   
   
4. Financing & Appraisal Contingency - More than 90% of home purchases are subject to buyers securing a mortgage loan. One of the loan conditions required by a lender is the property must appraise for no less than the contract sales price. If the property appraises for less than the sales price, then in some circumstances the buyer can cancel the property sale contract in Virginia. Otherwise, the buyer is free to negotiate a lower purchase price with the seller in order to meet the appraisal. Additionally, the buyer's financing is subject to lender underwriting requirements, receiving final loan approval, and in some circumstances, lender required repairs. If the lender determines the buyer is ultimately unqualified for the loan, then the buyer can cancel the real estate contract with written proof of the loan being denied.
   
   
5. Seller Liens, Judgments & Violations - Buyers have additional protections in the contract. For example, if the property is encumbered with a lien(s) or judgment(s) against the seller, then this can impact the buyer's ability to acquire clear, insurable and marketable title. If the seller does not correct title defects by settlement or as part of settlement, then the buyer can cancel the purchase agreement in Virginia. Likewise, if the seller has any active violations on the property issued by either the HOA/Condo association or local government, then the buyer can likewise declare the seller in default and pursue canceling the real estate contract.

The importance of buyers interviewing and selecting a skilled real estate agent to carefully guide them through the home buying process cannot be overstated. In my observation, this is possibly the most overlooked agent qualification by buyers and sellers. Contracts are complicated legal instruments. Proper agent advocacy protects a buyer from a serious loss of home value, forfeiture of their deposit, and even possible legal complications.

Tim Trainum is the owner of Tim Trainum Properties. He is a licensed Realtor serving the Northern Virginia region with 25+ years experience. Contact Tim today to discuss how he can help you buy or sell a property in Northern Virginia!