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Paragraphs that give a buyer the right to cancel.
If the buyer has not signed the cancellation paperwork, can the seller open a new escrow?
What happens if the seller won't release my deposits?
Should I order a building permit package? How do I know everything is permitted?
What happens if I can't get the loan even though I was pre-approved?
If the buyer cancels the escrow, what happens to the deposits?
Can the seller cancel the escrow?
Paragraphs that give a buyer the right to cancel.
The first and most frequent contingency used to cancel an escrow is the inspection period. During the inspection period you can cancel for any reason, so it is very easy to do so.
J-1 General Inspection of Property Contingency.
After the inspection period you have the disclosure contingencies.
If it is a single family home, you can cancel if there are encroachments on the survey that can't be corrected.
If you are getting a condo or a home with a home owner's association, you can cancel if you do not like something in the HOA or condo documents.
M-1 Contingency on Documentation Approval.
The finance contingency runs to the very end of the escrow and gives you the ability to cancel if the lender can't do the loan.
Two smaller contingencies normally available if the property is a rental are:
If the buyer has not signed the cancellation paperwork, can the seller open a new escrow?
You should try not to have two escrows open at one time. If the deposits are still in escrow, then the first escrow is still going on. You will not be able to open the escrow with the same company, as they won't open two escrows on the same property at one time. Also, should the escrow company find out there is another escrow going, they will not close your escrow until the first one is closed out.
What happens if the seller won't release my deposits?
If the seller will not sign off on your deposits, they will stay in escrow until an agreement is reached. If no agreement is reached after a certain number of months escrow would hire an attorney to look into the situation and make a decision on what happens with the deposits. As the attorney charges a lot for their time, most of the deposits would be used in attorney's fees, so it makes sense for the buyer and seller to reach an agreement without having escrow hire an attorney.
Sometimes mediation can be used to help the two parties reach an agreement, but that is an optional step and the results are not binding.
Typically what happens is the buyer will give a portion of the deposit to the seller in order to get them released and then the seller signs off on it.
Should I order a building permit package? How do I know everything is permitted?
A building permit package costs around $125. You can order one if you like, or you can also browse the permits from the links on OahuRE property detail page. Every property on our Website has a link to their permits. Some feel that the permit package you order is more in depth than the permit information you can get online. If you are concerned about something not being permitted then it is a good idea to review the permits. Normally sellers will know what is permitted and what is not permitted.
What happens if I can't get the loan even though I was pre-approved?
The offer has a financing contingency so if you can't get the loan, you can cancel the escrow and get your deposits back. Make sure you do it before the closing deadline though, because if not, sellers have been known to ask to keep part of the deposits because you went past the deadline.
If the buyer cancels the escrow what happens to the deposits?
If the buyer cancels within the contract terms, then they should get their deposits back. If they have breached the contract, the seller will probably ask to keep all or part of the deposits. To get a deposit back, both the seller and buyer have to sign off on it, so if the seller wants they can withhold signing. If that happens, the deposits stay in escrow until an agreement is reached. If this goes on for an extended period of time, escrow will eventually hire an attorney who will analyze the situation and decide what to do with the deposits. It is very rare for this to happen because normally the attorney bill would use most of the deposits anyway, so there is very little, if anything that is left.
The seller might be motivated to close out the escrow as they can't open a new escrow with the same escrow company until the current one is closed. They can however open a new escrow with a different escrow company.
Can the seller cancel the escrow?
Not unless the buyer breaches the contract. This assures the buyer that even if the seller receives a higher offer, they can't arbitrarily kick the buyer out of escrow. However, if the buyer misses a deadline, then the seller has the right to cancel the escrow.