At some point in many real estate transactions, when a purchaser decides he or she hasn't bought wisely and seeks to terminate the agreement, it may be necessary to determine whether all or a part of the deposit will be lost and if there are any other penalties.

To start, a purchaser can back out of the deal when an offer has been submitted but not yet accepted by the seller. In this example there is no contract and therefore no penalty.

In cases where a contract does not exist, it becomes necessary to look at the specific language of the agreement.

Does the contract contain certain contingencies? For example, if a contract provides that the maximum rate of interest to which the purchaser is committed shall not exceed 11 percent and such financing is not available, then grounds may exist to terminate the agreement.

To show that 11 percent financing is not available, a purchaser should keep a careful record of all inquiries to lenders -- to whom you spoke, the date, and the mortgage rate they offered. If even one lender meets the terms of the contract, a buyer is obligated to go through with the purchase or face a penalty. However, if no appropraite financing is available this fact must be communicated to the sellers or their agent as quickly as possible.

In some cases a sale will depend on a review or inspection "satisfactory" to the purchaser. If you are unhappy in this situation with the deal you need only tell the sellers.

"Telling the sellers" or their agent means more than a friendly phone call. Many contract forms provide that notices must be given in a certain manner -- say by the use of registered mail.

If you intend to withdraw from a sale you should have an attorney review the contract form and explain the exact steps that must be followed. This is a worthwhile expense even in situations that appear most friendly.

Once notice has been given that the deal is off, it should be concluded with a mutual release of all claims by each party against the other.