How do I legally back out of a real estate purchase agreement in California after my offer has been accepted?

You can legally back out of a real estate purchase agreement in California by using one of the contingency clauses in your contract within its specified timeframe. Here are the steps to cancel your agreement and protect your earnest money deposit. Step 1: Immediately Review Your Purchase Agreement Locate your signed Residential Purchase Agreement (RPA). Pay close attention to the "Contingencies" section. Common contingencies include loan approval, property appraisal, and a satisfactory home inspection. Note the specific deadlines for each; the standard is often 17 days, but this can be negotiated. Step 2: Use a Valid Contingency to Cancel If you are still within a contingency period, you can cancel for a reason related to that contingency. For example, if you are in your inspection period, an unsatisfactory inspection report is a valid reason. If you are in your loan contingency period, your inability to secure financing is a valid reason. Step 3: Provide Formal Written Notice of Cancellation Instruct your real estate agent to immediately prepare a formal "Cancellation of Contract" form (like C.A.R. Form CC). This document must clearly state which contingency you are using to cancel the agreement. You must sign and deliver this to the seller's agent before the contingency period expires. This written notice is critical proof. Step 4: Confirm Receipt and Instruct Escrow Ensure your agent confirms that the seller's agent has received the cancellation notice. Concurrently, send a signed copy of the cancellation notice to your escrow officer with instructions to return your earnest money deposit. Important details and nuances: Your earnest money deposit is generally protected as long as you cancel based on a valid, unexpired contingency. If you cancel after removing all contingencies, you have likely breached the contract. Under California Civil Code § 1675, the seller may be entitled to keep your deposit as liquidated damages. Also, if you receive a required disclosure, like the Transfer Disclosure Statement (TDS), late, you have a separate right to cancel within three days of personal delivery or five days of delivery by mail (Civil Code § 1102.3). Warnings and limitations: Contract deadlines are extremely strict. If you fail to act before a contingency period expires, you may be considered to have waived that right to cancel. Never rely on a verbal cancellation; it must be in writing. This is general information and does not constitute legal advice. For complex situations, such as a seller refusing to return your deposit or a cancellation after removing contingencies, consult with a qualified California attorney.