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Cancel The Purchase Deposit: When Is It Possible and What To Do in The Event of a Breach

Cancel The Purchase Deposit When Is It Possible and What To Do in The Event of a Breach - Cancel The Purchase Deposit: When Is It Possible and What To Do in The Event of a Breach

When buying a home, the first step is signing a deposit. It is a document by which the buyer and seller agree to continue the real estate transaction and by which the buyer pays an amount as a guarantee. Cancelling the deposit agreement is possible only in some cases, and the decision entails a series of nuances we recommend to know.

Types of deposit contracts

Not all deposit arrangements are the same. The difference is fundamental because it determines the possibilities of annulment and the type of economic compensation the decision entails.

Confirmatory deposit

There is no possibility of cancelling the sale by paying compensation. The party aggrieved by the withdrawal can demand that the transaction be continued or damages.

Penalty deposit

In case of non-compliance, the advance money acts as compensation. If the buyer breaches the contract, he will lose that amount. If the seller does so, he must return the deposit plus the additional amount stipulated in the contract as compensation for damages.

Penitential deposit

They are the most common. In this case, both parties may terminate the agreement freely, without breach. If the buyer withdraws, they will lose the deposit given. If the seller backs down, he must compensate the buyer with an amount that doubles the given deposit.

Circumstances that may lead to the cancellation of the deposit agreement

Although it is not usual, there may be many reasons to cancel the agreement:

On the part of the buyer: they have found another home that better suits his needs, they have not obtained a mortgage, have detected irregularities in the process, or don't accept delays in the delivery of the house.
On the part of the seller: he has found a buyer willing to pay more, or due to personal circumstances, he can no longer sell.

How to act upon withdrawal of the deposit contract

The most important thing is to read the agreement carefully and not sign it if we hesitate. Everything in it must be clearly specified, especially the type of deposit.

We must not forget that the consequences of non-compliance may vary from one person to another and that only a penitential deposit allows withdrawal without the need to compensate for damages in the form of a penalty. If it is an agreement of another type, the compensation clauses must be specified.

In the event of termination by the buyer, the seller may retain the deposit delivered until the conflict gets resolved and, depending on the type of agreement, claim compensation or performance of the contract.

If the seller breaches the deposit, and it's not penitential, the buyer must send a reliable notification demanding the fulfilment of the contract or the return of the amount paid plus the penalty for damages contemplated in the contract.

Cancelling the deposit contract, despite everything, is not usual. The most common thing is that the purchasing process comes to a successful helps you whether you are thinking of buying or selling. On our website, you will find a great real estate offer. Besides, you can list your property for free and sell it much faster.

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