After the attorney review period ends, a real estate contract does one of three things: it becomes fully binding on both parties, it gets canceled with no penalty, or it stays open while the attorneys negotiate changes. Which path you’re on depends entirely on what the attorneys sent each other before the clock ran out. This is the dividing line between a deal you could walk away from freely and one that carries real legal and financial weight if you don’t follow through.
The Three Possible Outcomes
Attorney review closes in one of three ways.
If both attorneys find the contract acceptable, either as written or with small clarifications, the agreement is approved. From that moment on, it binds both sides.
If one attorney sends a written notice rejecting the contract, the deal is off. Neither party owes the other anything, and the buyer’s earnest money is released from escrow.
If one or both attorneys propose changes, the review window stays open while the parties negotiate. Attorneys commonly request changes to inspection deadlines, closing dates, repair responsibilities, or how certain costs get split. If the two sides reach agreement, the revised contract becomes binding. If they can’t, either side can walk. Most deals that take extra time are sitting in this third bucket, and that back-and-forth is routine rather than a sign the deal is dying.
What Happens If Neither Attorney Says Anything
Silence is the trap. If the review period expires and no disapproval or modification letter has been sent, the contract becomes binding automatically. You lose the right to cancel without penalty.
The length of the window varies. In states with a formal statutory review period, it’s typically three to five business days after both parties sign. In states where attorney review is customary rather than required by law, the timeframe is written into the contract itself. The clock starts the moment the contract is executed, and missing the deadline locks you in.
If your attorney needs more time to work through issues, they should send a written modification or disapproval notice before the period expires. That keeps the window open. Raising concerns after the deadline puts you in a much weaker position.
Moving Forward Once the Contract Is Binding
After approval, both parties shift into the execution phase. The attorneys usually confirm approval in writing, and from that point every term in the contract carries legal weight. Walking away without a valid contractual reason can expose you to real financial liability.
For buyers, the immediate priorities are locking in mortgage financing, scheduling the home inspection, and making sure the lender orders the appraisal. For sellers, the focus turns to cooperating with the buyer’s inspection and providing any disclosures the contract requires. Both sides need to track deadlines closely, because contingency windows start running from the contract date or the end of attorney review, depending on how the contract is written.
Coordination matters more than people expect. The buyer’s lender, the title company, the home inspector, and both attorneys all need to stay on the same timeline. A missed deadline on one contingency can ripple through the whole transaction.
What a Disapproval Does
When an attorney sends a written disapproval during the review period, the contract is void. The letter is the official record that the agreement no longer exists, and neither party can force the other to proceed.
The earnest money, held in escrow, goes back to the buyer. Because the cancellation happened during the review period rather than after it, the seller has no claim to those funds. The release itself is usually straightforward, though it can take the escrow holder a few business days.
No reason has to be given. The review period exists precisely so that either side can back out without justification, and exercising that right carries no penalty. After disapproval, the seller is free to relist and the buyer can look elsewhere.
Contingencies That Still Have to Clear
Even after the contract is binding, several conditions still have to be satisfied before anyone sits down at the closing table. Each one has its own deadline, and missing a deadline can mean losing the right to cancel under that contingency.
Financing
The financing contingency gives the buyer a set window, usually 30 to 60 days from the contract date, to secure a mortgage commitment. The buyer submits income verification, bank statements, and other documentation to the lender during that period. If approval doesn’t come through in time, the contract can be canceled and the earnest money returned. Letting the deadline pass without a commitment or an agreed extension is the real risk: once the financing contingency expires, backing out over loan issues can mean forfeiting the deposit.
Home Inspection
The inspection contingency allows the buyer to hire a professional inspector to evaluate the property. The window is usually 7 to 10 days from acceptance, so it often overlaps with or immediately follows attorney review. If the inspection turns up serious problems, the buyer can negotiate repairs or a price reduction, ask for a credit at closing, or cancel the contract outright if the defects are severe enough. Sellers aren’t required to agree to repair requests, but refusing to negotiate when an inspection surfaces real issues often pushes buyers to exercise their cancellation right.
Appraisal
The lender orders an independent appraisal, usually within a 10- to 14-day window, to confirm the property is worth at least the purchase price. If the appraisal comes in at or above the contract price, the contingency clears and the deal moves forward. If it comes in low, the transaction gets more complicated.
Title
A title search examines public records to confirm the seller actually owns the property and to flag any outstanding liens, judgments, or other claims. The title company or a real estate attorney runs this process, and any defects have to be cleared before closing. Common problems include unpaid tax liens, old mortgages that were paid off but never formally released, boundary disputes, and errors in prior deeds. The seller is generally responsible for delivering clear title, and the contract typically gives them a set period to cure defects. Complex problems can push the closing date back significantly.
When the Appraisal Comes In Low
A low appraisal is one of the most common deal-killers in residential real estate. If the home appraises below the purchase price, the lender won’t finance the full amount, because they won’t lend more than the home is worth.
From there, a few things can happen. The buyer can pay the gap in cash. The seller can lower the price to match the appraisal. The two sides can split the difference. If none of those work, the buyer can cancel under the appraisal contingency and get the earnest money back.
Some contracts include an appraisal gap clause, which commits the buyer upfront to covering some or all of the shortfall in cash, up to whatever cap the clause specifies. If you’ve agreed to one, you’re on the hook for that extra cash regardless of what the appraisal says.
What It Costs to Back Out After the Contract Is Binding
Once the review period ends and the contract is binding, walking away without a valid contingency has real teeth.
The most immediate consequence for a buyer is losing the earnest money deposit. Most contracts treat the deposit as liquidated damages, meaning the seller gets to keep it. Deposits typically run 1% to 3% of the purchase price, so on a $400,000 home that’s $4,000 to $12,000 gone. If the seller is the one who backs out, the buyer gets the earnest money back and may have grounds to pursue additional damages.
Specific performance is the other serious remedy. Because every piece of real estate is unique, courts recognize that money alone sometimes can’t make the non-breaching party whole, so a court can order the breaching party to actually go through with the sale. A buyer can seek this when a seller refuses to close, and sellers can seek it against buyers in some jurisdictions, though less commonly. To get it, the party has to show the contract is valid, that they held up their own end, and that money damages wouldn’t be adequate given the property’s unique characteristics.
Monetary damages are also on the table. A seller can sue for the difference between the contract price and what the property eventually sells for, plus carrying costs during the delay. A buyer can recover inspection fees, appraisal fees, and loan application costs, along with any price difference if comparable homes have gone up. Courts require proof of actual losses; speculative damages don’t fly, and punitive damages are essentially never awarded in residential contract disputes.
The Three-Day Closing Disclosure Rule
One deadline applies nationally regardless of state law. Federal regulations require the lender to make sure the buyer receives the Closing Disclosure at least three business days before the loan closes.1eCFR. 12 CFR 1026.19 The document lays out the final loan terms, monthly payment, closing costs, and fees.
The three-day window gives the buyer time to review the numbers and compare them against the Loan Estimate issued earlier. If the terms have changed significantly, the lender may need to issue a revised Closing Disclosure, which resets the three-day clock and pushes closing back. That reset is one of the most common causes of last-minute closing delays, so staying in close contact with your lender through the post-review period helps avoid surprises at the end.