What Happens When A Home Purchase Contract Expire

Q: We’re selling our home. The buyers seem to be having trouble getting their mortgage. Does the contract ever expire? Wayne, Clifton, NJ

A: Yes, a home purchase contract can expire.  It’s important to clearly define the expiration date in the contract and to include contingency clauses in the contract. Contingency clauses outline conditions that must be met for the home purchase to successfully close. Common home purchase contract contingencies include home inspection, appraisal, mortgage financing, and selling a previous home.  Generally speaking, when a home purchase contract expires, the buyer and seller are no longer obligated to the terms of the contract meaning that neither the buyer nor the seller is legally obligated to proceed with the sale–the seller can then normally market the property to other buyers, and the buyer is free to look for another property, with the buyer typically getting their earnest money deposit back unless the contract specifies otherwise due to a breach of the contract by the buyer.

The buyer and seller can mutually agree to extend the closing date. For example, if the buyer’s financing is delayed, the seller may agree to extend the closing date to give the buyer more time to obtain mortgage financing.  Thanks for your question, Wayne.

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