Buying or selling a home is one of the biggest financial transactions most people will ever make. In Massachusetts, once you’ve signed a real estate contract, both parties are legally bound to follow through with the terms. But what happens if a buyer or seller wants — or needs — to back out? Breaking a Massachusetts real estate contract isn’t always simple, and the consequences can be serious if not handled correctly.

In this guide, we’ll walk through when and how contracts can be legally terminated, the potential penalties involved, and what steps you can take to protect yourself.

Understanding Massachusetts Real Estate Contracts

A real estate contract in Massachusetts is a legally binding agreement between a buyer and seller. It typically includes:

• Purchase price and terms

• Financing requirements

• Inspection timelines

• Contingencies (such as mortgage approval, appraisal, or sale of the buyer’s current home)

• Closing date

Once signed, both parties are expected to perform their obligations. However, certain conditions may allow either party to walk away without penalties.

Common Reasons Buyers Can Break a Contract

1. Inspection Contingencies

If the home inspection reveals major structural, electrical, plumbing, or safety issues, the buyer can typically request repairs, renegotiate, or back out entirely.

2. Financing Contingency

If the buyer is unable to secure a mortgage by the agreed-upon deadline, they may legally exit the contract.

3. Appraisal Contingency

When the home doesn’t appraise for the agreed purchase price, buyers may have the right to terminate the deal unless the seller adjusts the price.

4. Sale of Current Home

Some contracts are contingent upon the buyer selling their current property first. Failure to do so can allow them to walk away without losing their deposit.

Can Sellers Break a Real Estate Contract in Massachusetts?

Sellers usually have fewer options to break a contract compared to buyers. Once they’ve agreed to the terms, they’re legally required to sell unless the buyer fails to meet contract obligations.

However, a seller might be able to terminate the contract if:

• The buyer misses deposit deadlines.

• The buyer fails to obtain financing.

• Inspection or appraisal contingencies aren’t satisfied.

If a seller backs out without legal justification, they may face a lawsuit for specific performance, in which the court orders them to complete the sale, or be liable for damages.

What Happens If You Break a Massachusetts Real Estate Contract?

Breaking a contract without a valid contingency can result in serious financial consequences:

• Buyers risk losing their earnest money deposit.

• Sellers may face legal action and financial penalties.

• Both parties may be responsible for covering the other’s costs, including legal fees.

How to Protect Yourself

• Work with a qualified real estate agent who understands Massachusetts laws and contract terms.

• Review contingencies carefully before signing.

• Consult with a real estate attorney before attempting to break a contract.

• Communicate clearly and early if issues arise — sometimes negotiations can save the deal without legal trouble.

Breaking a Massachusetts real estate contract isn’t something to take lightly. While contingencies provide legitimate ways to exit a deal, walking away without legal grounds can lead to financial and legal headaches. Whether you’re a buyer or seller, always understand your contract before signing, and consult with professionals if you’re considering backing out.

By being informed and cautious, you can avoid costly mistakes and proceed with confidence in your real estate journey.

Matt Witte strives to be the best realtor in North Andover, MA.

Any questions about real estate, reach out to Matt Witte, North Andover Realtor, MA