“On what date can the buyer no longer back out without penalty?”
Answer:
It depends on the contract. It’s often the 17th day after acceptance, but your case could be different.
Let me address a related issue…
Many agents tell their clients, “if the buyer cancels, you get the deposit.”
This is not necessarily correct.
If they cancel after all contingencies are removed, their deposit is “at risk.”
The deposit is held by an escrow company, which is a neutral party and cannot interpret the contract and determine if the buyer is within their rights to cancel. They can only take action (in this case, release the deposit) with mutual instructions or a court or arbitration order.
In other words, if the buyer cancels:
A) You and the buyer would have to agree to what happens to the deposit. OR
B) If you don’t agree, you’d have to go to small claims court or mediation and possibly arbitration. OR
C) The deposit just sits in the escrow company’s account for a certain time period; then it’s forfeited to the state of California.
The point is that as the seller you don’t automatically get the buyer’s deposit if they break the contract.
