How 'Cold Feet' Can Sink
A Real-Estate Agreement

Question: I just signed a purchase agreement for a condo that is currently under construction and will be ready in about a year. For a number of reasons (unit is too small, floor plan isn't optimal), I would like to terminate the agreement that I signed last week. Is there a grace period that allows me to terminate the contract if I get "cold feet"?

-- Steven, Phoenix

Steven: Unfortunately, there generally is no grace period in real-estate contracts. These documents are intended to be legally binding, and once the agreement has been signed, you usually can be held to it -- if properly drawn. If you try to back out, you could lose your deposit or worse: You could be sued by the seller for specific performance (demanding that you continue the purchase) or damages.

That said, however, there often are "outs" in most contracts. For example, in the sale of a completed property in California you have three days to approve the seller's disclosures. Typically you won't get these until after you sign the contract, so if there is something you dislike, you can disapprove within the time limit to break the deal.

Similarly, many contracts provide 14 days or more for a professional inspection of a completed property. If the inspector discovers something you don't like, you can disapprove the inspection report within the time limits. Again, you would be out of the deal. But as the time limits on these and other contingencies expire, the contract gets tighter and tighter. Many agents describe today's real-estate closing period as time spent eliminating contingencies.

With regard to property built for resale that has yet to be completed, some states have special rules that can require a full refund of the deposit and a voiding of the contract if you decide you don't really want the property. Again, time limits may apply. Have a good real-estate agent or attorney look at your contract to explain your options.

-- Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Tips and Traps When Renovating Your Home," (McGraw-Hill, 2000).

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