What is 'void versus default' in a real estate contract?

This is one of the most important contractual distinctions in a real estate transaction, and one that most sellers and many buyers don't fully understand until they're in the middle of a problem. Knowing the difference between a voided contract and a defaulted contract before you're in that situation can save you significant time, money, and stress.

A voided contract means the deal ends and both parties walk away whole. When a buyer exercises a legitimate contingency, an inspection contingency because they found serious defects, or a financing contingency because their loan was denied, they're exercising a right they negotiated into the contract. The contract is terminated, the earnest money is returned to the buyer, and neither party has liability to the other. It's a clean exit through a defined door.

A defaulted contract means one party failed to perform their contractual obligations without a legitimate basis. If a buyer backs out after all contingencies have been satisfied, they have loan approval, the inspection is done, the appraisal cleared, and they simply decide they don't want to proceed, that's a default. The seller's typical remedy is to retain the earnest money deposit as liquidated damages. In some states and under some contracts, the non-defaulting party can also seek additional damages beyond the earnest money, though that usually requires legal action and is less common in residential transactions.

As a seller, you can also default. If you go under contract and then refuse to close because you changed your mind, got a better offer, or decided you don't want to sell, you're in breach of contract. The buyer's remedies typically include getting their earnest money back plus potentially suing for specific performance, forcing you to complete the sale, or recovering their actual damages. Backing out of a ratified contract as a seller is a serious legal situation that requires an attorney's involvement, not something to do casually.

On the "as-is" clause and its limits: many FSBO sellers want to sell as-is to avoid repair negotiations. An as-is clause means the buyer is accepting the property in its current condition and generally waives the right to request repairs. However, it doesn't waive the buyer's inspection contingency unless that contingency is explicitly waived in the offer. A buyer can still inspect an as-is sale and choose to exit through the inspection contingency based on what they find. The as-is clause limits your repair obligations. It doesn't eliminate the buyer's ability to walk away.

These distinctions matter most when a deal is under stress. Read your contract carefully, understand what each contingency deadline means, and consult a real estate attorney if a deal starts heading toward dispute. The cost of a few hours of legal advice is almost always worth it compared to the cost of a badly resolved contract problem.