Can I Back Out of a Home Purchase After Making an Offer in San Diego?

When You Can Cancel and Get Your Deposit Back

California's purchase contract is designed to give buyers several protected windows during which they can cancel for specific reasons and receive a full refund of their earnest money deposit. Understanding these windows — and the deadlines associated with them — is essential for any San Diego home buyer.

Protected Cancellation Windows

• During the inspection contingency period (typically 17 days): Cancel for any reason related to the property's physical condition — or for any reason at all if you choose
• During the loan contingency period (typically 21 days): Cancel if your financing falls through or cannot be secured on acceptable terms
• During the appraisal contingency period (typically 17 days): Cancel if the property appraises below your agreed purchase price and you cannot reach a resolution with the seller
• During the HOA document review period (typically 5 days from receipt): Cancel if the HOA documents reveal unacceptable conditions

After Contingencies Are Removed

Once you have signed the Contingency Removal form and removed all contingencies, you are bound to complete the purchase. If you cancel without a valid legal reason after removing contingencies, the seller may claim your earnest money deposit as liquidated damages — typically up to 3 percent of the purchase price in California.

Legitimate Reasons to Cancel After Contingency Removal

• Seller materially misrepresented the property condition — potential fraud claim
• Seller cannot deliver clear title at close of escrow
• Seller breaches the contract in a material way
• A newly discovered issue the seller failed to disclose that could not have been found during inspection

The Cost of Canceling Without Cause

Canceling without a valid contractual reason after removing contingencies puts your earnest money at risk. On a $900,000 San Diego purchase with a 3 percent deposit, that is $27,000 at risk. Rieder Homes Group works with every buyer to ensure they make fully informed decisions before removing contingencies.

Related Reading on RiederHomes.com:

→ Blog #87: Earnest Money

→ Blog #89: Contingencies Explained

→ Blog #86: Making an Offer

→ Blog #90: Appraisal Contingency

— Mance Rieder, Broker Associate | Rieder Homes Group | REAL Broker | riederhomes.com | 858-295-0556