Can I get out of a contract?
It's just as important to know how to get out of a contract as how to enter into one, so let's look at the 2 contingencies every Kentucky contract offers to the buyer that allows them to exit a contract legally.
- First exit strategy: If you don't like what you find in your home inspection period (mold, lead based paint, foundation issues) and the seller is not willing to do the necessary repairs, you can exit your contract as long as the seller is informed before the end of your home inspection period (which can be anywhere from 5-15 days, depending on your contract verbiage). You should have your agent inform the listing agent about your concerns, and it would be beneficial to provide the inspection report to prove your concerns if the seller wants to see it. Remember that entering a contract is a legal action and should not be taken lightly. Getting cold feet and just deciding you don't want the property is not what this exit strategy is about. It's about protecting you should you find something during your inspection that you did not know about before and which is significant enough to make you not want the property anymore.
- Second exit strategy: At the very end of your loan qualifying process, when all your documents are with the underwriter, the underwriter may find that there are issues with the financing that were not known during the pre-approval stage or have changed during the time you have been under contract. Perhaps there were past finances that you did not bring up early on, a debt not paid, or a new purchase you made on a credit card that has changed your debt to income ratios. These then become a reason for the lender to deny your loan application. When this happens, the lender writes a lender denial letter and your agent sends this to the seller's agent. This financing contingency brings up another important point that your lender and agent should tell you while you are under contract, especially if you are a First Time Home Buyer, and that is DO NOT buy anything out of the usual before your closing. If you do, you may just have increased your debt to income ratio and kicked yourself right out of the deal!