Rescission is the cancellation of a real estate contract between the buyer and seller. The act of rescinding a contract will “unwind” the transaction specified in the contract.
A real estate contract may be rescinded at varying points during a transaction. If one party decides to rescind the contract, there may or may not be consequences to rescinding a contract. For example, if the contingency periods have expired and the buyer were to rescind their purchase agreement, the seller may be entitled to damages. Most contracts would allow for the seller to retain the buyer’s earnest money deposit in this instance.
Rescission can also be used during the offer-counteroffer process prior to mutual acceptance. If one party submits a counteroffer to the other party, they may rescind that counteroffer at any point before the other party accepts it.