Can You Terminate a Real Estate Contract in New Jersey or Pennsylvania?

Can You Terminate a Real Estate Contract in New Jersey or Pennsylvania?

One of the most common questions we receive from buyers is whether they can cancel a real estate contract after signing—either due to a change of heart or because they found another home they prefer.

First and foremost, consult your attorney for legal advice specific to your situation. However, here’s a general overview of contract termination rights in New Jersey and Pennsylvania and how the process works.

New Jersey: Attorney Review & Inspection Periods

In New Jersey, once a contract has been executed (signed by both buyer and seller), it enters a mandatory attorney review period—typically three business days.

🔹 During Attorney Review:

• Either party’s attorney can cancel or amend the contract without penalty.

• If you wish to withdraw from the contract for any reason, your attorney must notify the seller’s attorney before the end of attorney review.

🔹 During the Inspection Contingency Period:

• After attorney review, buyers have a 10-14 day period (or as specified in the contract) to complete their home inspection.

• If material defects are discovered, the buyer can either:
  ✔ Request repairs or seller credits, or
  ✔ Choose to terminate the contract and receive an earnest money refund (provided this is done within the contingency period and in accordance with the contract’s terms).

• The buyer’s attorney must formally notify the seller’s attorney before the inspection period expires.

⚠ Once both attorney review and the inspection period have ended, it becomes extremely difficult (if not impossible) to cancel the contract without legal consequences.

Pennsylvania: Inspection Contingency & Contract Terms

In Pennsylvania, there is no formal attorney review period—once a contract is signed by both parties, it is legally binding immediately.

🔹 The Inspection Contingency Period:

• Similar to New Jersey, Pennsylvania contracts typically include a 10-14 day inspection contingency (check your contract for exact terms).

• If significant inspection issues arise, buyers can:
  ✔ Negotiate repairs, credits, or price reductions, or
  ✔ Exit the contract and receive their earnest money refund (provided this is done before the contingency deadline).

• The buyer’s agent must submit a formal Notice of Termination before the contingency expires.

Once the inspection period ends, the contract is legally binding, and backing out could result in the forfeiture of your earnest money—or even legal action by the seller.

What Happens If You Want to Cancel the Contract?

1️⃣ Consult Your Attorney Immediately – If you are considering canceling the contract, your attorney will guide you on your legal options.
2️⃣ Act Within the Attorney Review or Inspection Period – If you wish to terminate the contract, it must be done before these timeframes expire.
3️⃣ Formal Written Notification – In New Jersey, your attorney must send a letter to the seller’s attorney. In Pennsylvania, your real estate agent must submit a formal Notice of Termination.
4️⃣ Earnest Money Refund Process – A cancellation request is typically accompanied by a form that both parties sign, ensuring the earnest money deposit is returned to the buyer.

Final Thoughts

✅ If you are in New Jersey, attorney review provides an early opportunity to withdraw from the contract without penalty.
✅ In both NJ and PA, the inspection contingency offers a way to exit the contract if material defects are found.
✅ Once these periods expire, canceling the contract becomes significantly more difficult and may have financial or legal consequences.

If you are uncertain about your rights or next steps, reach out to your attorney immediately for guidance. We’re here to support you every step of the way!