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.CANCELLATION OF BUYER’S ACCEPTED OFFER: CANCELLATION OF ACCEPTED OFFER FOR BUYER’S PROPERTY: If Buyer’s Accepted Offer cancels for any reason, Buyer shall deliver notice to Seller within three (3) days of Buyer’s receipt of cancellation and provide evidence of cancellation. Notice to Seller shall state Buyer’s election to either: 1) Immediately cancel this Contract and all Earnest Money shall be released to Buyer; or 2) Proceed with the Contract by removing this Buyer Contingency and provide: (i) written documentation from Buyer’s Lender that Buyer can close escrow by the COE Date without the sale and closing of Buyer’s Property; or if this is an all cash sale (ii) evidence of Buyer’s financial ability to close escrow by the COE Date without the sale and closing of Buyer’s Property. Should Buyer elect to proceed with this Contract, Seller and Buyer agree that all other contingencies shall remain. CHOOSE ONE OF THE FOLLOWING: USE NOTICE FORM 1) “NOTIFICATION AND ACKNOWLEDGEMENT OF CANCELLATION OF BUYERS ACCEPTED OFFER AND BUYERS CANCELLATION OF PURCHASE CONTRACT” “Buyer hereby delivers notice to seller that buyers accepted offer for the property located at XXX Main Street, Tempe has been cancelled. Evidence of cancellation is Attached. (See Line #’s 24-26 of the BCA). Therefore, Buyer elects to immediately cancel the purchase contract for the for the property located at XXX Main Street, Tempe and requests that Earnest Money be immediately released back to Buyer per line #27 of the Buyer Contingency Addendum.” Title Company is hereby instructed to issue written notice of escrow cancellation and immediately release Earnest Money to Buyer.” (Unless EM was non-refundable). 2) “NOTIFICATION AND ACKNOWLEDGEMENT OF CANCELLATION OF BUYERS ACCEPTED OFFER, BUYER ELECTS TO REMOVE CONTINGENCY AND PROCEED WITH PURCHASE CONTRACT” “Buyer hereby delivers notice to seller that buyers accepted offer for the property located at XXX Main Street, Tempe has been cancelled. Evidence of cancellation is Attached. (See Line #’s 24-26 of the BCA). Buyer hereby informs Seller that Buyer is Removing the Buyer Contingency from the Purchase Contract dated xx/xx/xxxx and will proceed to close escrow, notwithstanding the terms and conditions agreed to in the Purchase Contract (see line #28-30 of BCA). Lender Pre-Qualificaton (or LSU or proof of funds if cash) is attached with the Box on Line #8 (Line #14 LSU) checked that “Buyer is not relying on the sale or lease of a property to qualify for this loan.’ “Home Sale Requirement” provision is now removed. This Purchase Contract shall continue in full legal force and effect.” BUYER CONTINGENCY ADDENDUM, SELLER ACCEPTS BACKUP OFFER: (Note: Back up Offer Cannot “Kick Out” Offer when contingent on COE only (Section 2 of form or accepted/approved offer on Section 1 of form). Scenario, Buyer submits BCA with purchase contract, contingent on Accepted Offer For Buyers Property (Section 1). Seller accepts. During escrow, Seller accepts backup offer. Buyer has two choices: 1) Remove contingency and continue with transaction, or 2) Cancel transaction. Seller first delivers notice to buyer, buyers responds with number one or number two below. Use NOTICE FORM: “NOTIFICATION AND ACKNOWLEDGEMENT THAT SELLER HAS ACCEPTED BACKUP OFFER” “Seller hereby delivers notice to Contingent Buyer that Seller has accepted a backup offer for the property located at XXX Main Street, Tempe. See line #’s 33-39 of BCA. Buyer now has 3 days or X days to deliver written notice to seller that Buyer elects to either Remove Contingency and proceed to close or this contract shall be deemed cancelled and Earnest Money shall be released to the Buyer. If Buyer elects to proceed to close, notice from Buyer shall include written documentation from Buyers Lender (Pre-Qualification or updated LSU with Home Sale Provision removed), or if all cash, evidence of Buyers Financial Ability to close escrow by the COE date without the sale and closing of the Buyers Property.” CHOOSE ONE OF THE FOLLOWING: USE NOTICE/DISCLOSURE FORM 1) “NOTIFICATION AND ACKNOWLEDGEMENT OF BUYERS CONTINGENCY REMOVAL” Buyer received notice on xx/xx/xxxx that Seller has accepted a backup offer for the property located at XXX Main Street, Tempe. As per line #’s 33-39 of the Buyer Contingency Addendum, Buyer hereby informs Seller that Buyer is Removing the Buyer Contingency from the Purchase Contract dated xx/xx/xxxx and will proceed to close escrow, notwithstanding the terms and conditions agreed to in the Purchase Contract (see line #40-41 of BCA). Lender Pre-Qualificaton (or LSU or proof of funds if cash) is attached with the Box on Line #8 (Line #14 LSU) checked that “Buyer is not relying on the sale or lease of a property to qualify for this loan.’ “Home Sale Requirement” provision is now removed. This Purchase Contract shall continue in full legal force and effect.” OR 2) “NOTIFICATION AND ACKNOWLEDGEMENT OF BUYERS CANCELLATION” Buyer received notice on xx/xx/xxxx that Seller has accepted a backup offer for the property located at XXX Main Street, Tempe, Arizona. As per line #’s 33-39 of the Buyer Contingency Addendum, Buyer hereby informs Seller that Buyer is unable to remove the Buyer Contingency and elects to immediately cancel the Purchase Contract dated xx/xx/xxxx. Earnest Money to be immediately refunded to the Buyer.” BUYER CONTINGENCY FAILED, BUT KEEP CONTRACT IN FORCE, EXECUTE REPLACEMENT BCA OR EXTEND: “Seller & Buyer acknowledge and agree that the Buyer Contingency which was attached to and made a part of the PC dated xx/xx/xxxx has failed due to the cancellation of the buyers accepted offer. Contrary to any language otherwise in the PC, Addenda or other related documents, Seller & Buyer agree that this PC will not be cancelled and will remain in full legal force and effect and both parties hereby agree to execute the attached, Revised/Amended Buyer Contingency Addendum simultaneously along with this Addendum.”
Q: We have a buyer contingency offer on the new home for our seller and our buyer just cancelled. Per the 2nd section of the contingency addendum we need to give notice to the seller that we have lost our buyer and the contract be deemed cancelled. The seller we are under contract with is willing to convert the contingent offer to a section 1 contingent offer still keeping us under contract and allowing us the opportunity to get the house back under contract… my question is, can we write an addendum to change the original contingency addendum or do we need to cancel the entire contract and re-write it using a new contingency addendum with section 1 checked instead of section 2 checked?
A: XYZ, you could do it on an Addendum, say something like "Buyer has notified Seller that their Contingent Offer for the property located at 123 Main Street has been cancelled. Contrary to any language otherwise, either in the PC or any related documents or Addenda, this Purchase Contract dated xx/xx/xxxx shall not be cancelled. Buyer and Seller agree to execute an Amended Buyer Contingency Addendum (attached). The Purchase Contract dated xx/xx/xxxx shall remain in full legal force and effect. All other terms and conditions shall remain the same." OR “Contingency Period to have Buyers property at 123 Main St, Tempe, AZ under contract is hereby extended to xx/xx/xxxx.” Be sure to check your COE date on your PC to see if that needs to be amended as well. BUYER CONTINGENCY, OFFER CANCELLED: Section 2 of BCA: (CONTINGENT ON SUCCESSFUL CLOSING): USE NOTICE FORM NOTE: NO kickout clause if use SECTION TWO of BCA. ANY OFFER WILL BE A BACK UP! (UCB STATUS IF SECTION 2) NOTIFICATION AND ACKNOWLEDGEMENT OF CANCELLATION OF BUYERS ACCEPTED OFFER FOR BUYERS CONTINGENT PROPERTY AND BUYERS CANCELLATION OF PURCHASE CONTRACT OR CONTINGENCY REMOVAL...CHOOSE ONE OF THE FOLLOWING: USE NOTICE FORM 1) “NOTIFICATION AND ACKNOWLEDGEMENT OF CANCELLATION OF BUYERS ACCEPTED OFFER FOR THEIR CONTINGENT PROPERTY, BUYER ELECTS TO CANEL THIS CONTRACT: Buyer cancelling purchase due to cancellation of the sale on their CONTINGENT PROPERTY where they are sellers: “Buyer hereby gives notice to seller that buyers accepted offer for the sale of their contingeny property located at 123 Main Street has been cancelled. (See Line #55-57 of BCA, also see attached evidence of cancellation). Therefore, as per Line #58 of the Buyer Contingency Addendum, Buyer hereby elects to cancel this contract and requests that earnest money be immediately refunded to buyer. XYZ Title is hereby instructed to issue written notice of escrow cancellation and immediately release Earnest Money back to Buyer.”OR
NOTIFICATION AND ACKNOWLEDGEMENT OF CANCELLATION OF BUYERS ACCEPTED OFFER AND BUYERS REMOVAL OF CONTINGENCY: 2) “NOTIFICATION AND ACKNOWLEDGEMENT OF CANCELLATION OF BUYERS ACCEPTED OFFER FOR THEIR CONTINGENT PROPERTY, BUYER ELECTS TO REMOVE CONTINGENCY AND PROCEED WITH PURCHASE CONTRACT” “Buyer hereby delivers notice to seller that buyers accepted offer for their contingent property located at XXX Main Street, Tempe has been cancelled. Evidence of cancellation is Attached. (See Line #’s 55-57 of the BCA). Buyer hereby informs Seller that Buyer is Removing the Buyer Contingency from this Purchase Contract dated xx/xx/xxxx and will proceed to close escrow, notwithstanding the terms and conditions agreed to in the Purchase Contract (see line #59-61 of BCA). Lender Pre-Qualificaton (or LSU or proof of funds if cash) is attached with the Box on Line #8 (Line #14 LSU) checked that “Buyer is not relying on the sale or lease of a property to qualify for this loan.’ “Home Sale Requirement” provision is now removed. This Purchase Contract shall continue in full legal force and effect.” BUYER CONTINGENCY IS NOW WAIVED/SATISFIED: Q: I have a buyer who no longer needs to purchase contingent on the sale of his property. He would be completely removing that contingency. Do I just use an addendum to state the contingency is removed? A: Hi XYZ, while not required, you could certainly create an Addendum stating that "the buyers home sale contingency has been satisfied and is hereby removed as a condition of this purchase contract dated xx/xx/xxxx." Totally up to you. OR
In connection with this agreement, Buyer and Seller executed a Buyer Contingency Addendum providing that Buyer’s obligation to complete the purchase of the property was contingent upon Buyer’s closing of the sale of other real property owned by Buyer (defined in the Buyer Contingency Addendum as the “Contingent Property”). By signing below, the parties acknowledge and agree that buyer hereby waives and releases the contingency described in the Contingency Addendum, agrees Buyer’s obligation to purchase the property is no longer contingent on the sale of any other real property and agrees Buyer has no further right to terminate this Agreement under the Buyer Contingency Addendum. Buyer _______Date _______Buyer ________Date________ Seller________Date________Seller_________Date__________
BUYER CONTINGENCY ADDENDUM, DELAY INSPECTIONS UNTIL OFFER 1) RECEIVED, OR 2) APPROVED, IF MY BUYER) (Use language from back up offer/short sale addendum) 1) “The date of Buyer’s written notice to Seller that Buyer has accepted an offer for Buyer’s property shall be deemed the date of contract acceptance for purposes of all applicable contract time periods. Buyer shall promptly open Escrow and deposit Earnest Money as described in the Contract upon delivery of written notice of Contract Acceptance to Seller.” OR 2) “The date of Sellers written notice to Buyer that Seller has Approved of offer for Buyer’s contingent property shall be deemed the date of contract acceptance for purposes of all applicable contract time periods. Buyer shall promptly open Escrow and deposit Earnest Money as described in the Contract upon receipt of written notice that Seller has Approved of Buyers Offer on his/her Contingent Property.”
BUYER CONTINGENCY ADDENDUM: SHOULD THE OFFER BE CONTINGENT, OR NOT? CASE STUDY AND SOLUTION FROM BROKER EMAIL. Q: I'm representing the seller on this one She accepted an offer – the offer was not contingent according to pre-qualification and the BCA was submitted with the purchase contract. AFTER contract is fully executed, buyer's agent tells me that the buyers are selling their current home to Open Door and they want it to close on the same day as my seller's COE. So, I called the lender and he assured me that their loan is not contingent upon the sale of their home to Open Door and that a same day closing will be just fine. I probed further and told lender that they must then have the funds to close on OUR transaction whether or not their sale with Open Door closes? He said no, they do not have the funds, but that they are far enough along in their sale to Open Door to issue a pre-qual with no contingency. He says buyers are well-qualified. I'm uneasy. I'm thinking I should send them an addendum making their earnest deposit hard. Not sure what else I can do at this point. Any thoughts on this? A: Kerry, do you have the pre-qual showing not contingent? If it is, and they are not being truthful, they are committing a fraud. That could lead to serious consequences if the deal blows up. Q: I'm very concerned. My gut tells me that they are committing fraud. The pre-qual shows not contingent. When I spoke with the lender, he said they "didn't need to close on their home to qualify." So I said, "Ok, then they have funds from somewhere else you're pulling from...like a 401K or something?" He said no, they don't have the funds. Then he said, "Technically, it IS contingent then." But the other agent got pushy...told me not to talk to the lender.... please see texts attached. I'm still new at this and need help. Very worried. Thank you. A: Tell the other agent you talked to your broker and that you are requesting an updated LSU immediately showing that this sale is NOT contingent. If they do not send the updated LSU immediately, send them a cure notice regarding that. Remind the other agent that a home sale contingency is an extremely material matter and failure to disclose that, by either the buyer or their agent (if the agent has that knowledge) would be considered intentional misrepresentation and would have severe consequences for both the buyer and the agent. You absolutely have every right to speak with the lender regarding the buyers qualifications, that is routine communication that happens in every transaction. CAMERAS: So, I was at a listing appointment and the seller informed me that there are cameras in the house. They record both audio and video. Are there any legal issues with this if the house is listed with a Realtor? Not that I've ever heard of Diane, especially if they disclosed that there were cameras with audio there. So does it need to be disclosed somehow for Buyers agents/buyers looking at the house? Good morning Diane, An NAR article from June, 2016 states the following: The cameras are most likely legal, although the laws can vary by state, says Indiana University law professor Fred Cate. “It's against the law to record someone on audio or video if they’re in a situation in which they have a reasonable expectation of privacy, [such as in] a changing room or a locker room or a bathroom,” says Cate, author of “Privacy in the Information Age.” “But when you’re in somebody else's house with a real estate agent, it’s a little harder to argue you really have an expectation of privacy.” So, as a professional courtesy, it's my opinion that it's probably a good idea to disclose that there are cameras recording both video & audio in the home. http://realtormag.realtor.org/daily-news/2018/03/16/are-you-being-spied-during-showings CAMERAS, CASE STUDY: Q: I have a question. I have a listing that has security cameras in place. I did note this in the listing. As an agent representing the seller would I do anything else when it comes to showings? I am asking because of the feedback I received...see below. “All and all the feedback would be positive. There are many nice features, upgrades etc to the home. There is nothing worse than trying to show a home when you have cameras staring at you and knowing the seller is watching. It is impossible for the buyer to express their feelings about the home or talk about an offer when you know you are being watched. After we left he started to open up and I believe if we had talked openly at the home about the home, we might have even wrote an offer on the home. He had concerns about the construction of the additional bedroom upstairs that I didn't get to handle at the listing. He had concerns about the many ceiling repairs that I didn't get to handle at the listing. He wanted to talk about the home and an offer with me at the property, but that didn't happen until we left and our conversation ended as soon as we arrived at the next home in the area. He wanted to facetime his wife the home, but decided against it because he didn't want to get into it with the cameras on. Anyhow, we have a verbal acceptance on a similar home and are likely out of the market at this point. I wish you luck with the sale.”
A: Hi Sharon, sorry I didn't reply sooner but wanted to be sure to give you the right answer. It's against the law to record someone on audio or video if they’re in a situation in which they have a reasonable expectation of privacy, [such as in] a changing room or a locker room or a bathroom, But when you’re in somebody else's house with a real estate agent, it’s a little harder to argue you really have an expectation of privacy. Each state has it's own laws regarding video and audio surveillance, see the state by state requirements at the following NAR link: https://www.nar.realtor/law-and-ethics/video-and-audio-surveillance-state-law-survey Brokers should consider hanging a sign in the home or posting a notice in their MLS listing to alert other real estate professionals that there is a surveillance device, such as cameras on the property. Watch this video from the National Association of REALTORS® to learn more: https://www.nar.realtor/videos/window-to-the-law/window-to-the-law-video-and-audio-surveillance-issues So, as a professional courtesy, it's my opinion that it's probably a good idea to disclose that there are cameras recording in the home. You cannot audio record another person in AZ without their permission unless you are a party to the conversation.. Please let me know if you have any further questions regarding this. Jeff. (Thank you for your response. I did have the note in the MLS before the agent showing Please see my listing attached to this email. My guess is that the agent read the note from the listing and knew the cameras were there and didn’t like the cameras. Or, maybe they didn’t read the notes in the listing and were just very upset. Hard to say. There are only 2 cameras. I wanted to make sure I did everything correctly though. Sharon) Private Remarks MLS: Agents: As part of the security system, video cameras in use. All matters of material importance to be verified by buyer. CANCEL: SEE CURE NOTICE, CANCELLATION FOR LANGUAGE CANCELLATION, P.9, SECT 8L, LINE 421-423: “Cancellation shall become effectively immediately upon delivery of the cancellation notice.” (NOTE: We ratify cancellation by accepting sellers signature on sold/change form and submitting paperwork to broker dept). CANCEL: 5 DAYS TO DISAPPROVE: Q: From sections 4a (SPDS) and 4b (Insurance Claims History) of the Purchase Contract, it is my understanding that buyer has "...inspection period or five (5) days after receipt of SPDS/claims history, whichever is later" to provide notice of items disapproved. WHAT DOES THIS MEAN? A: The inspection period is still 10 days (or extended if the parties agree to that) so the BINSR still needs to be submitted within that time frame regardless of whether or not you received the SPDS or Ins Claims History. However, you do have 5 days to disapprove of SPDS or Ins Claims History either 1) during the inspection period (if you timely received them), or 2) Five days after you actually do receive them, whichever is later. So theoretically, if I submit my BINSR on day 10, but I don't get the SPDS or Ins Claims History from the seller until that same day, I have five extra days to review those and possibly disapprove (cancel) if they contain negative information. QQ: If buyer chooses to cancel, what is best way to issue cancellation, if BINSR has already been submitted? What if buyer does not want to cancel, but wants two additional items repaired that buyer did not know about prior to receiving SPDS/Insurance? Do those get added to additional BINSR? Written on an addendum? AA: In your scenario to cancel on the SPDS, I would utilize the form called "Notice/Disclosure" which is a new form on zipForms (new as of June 1). On the form I would state something like " “Buyer hereby elects to immediately cancel the purchase contract after receipt and review of the SPDS wherein the seller disclosed significant, material issues with the property which were previously unknown by and are unacceptable to the Buyer. This includes xxxx, xxxx and xxxx. Section 4a of the purchase contract states: Buyer shall provide notice of any SPDS items disapproved within the Inspection Period or five (5) days after receipt of the SPDS, whichever is later.” In re to your second question, if you were going to add items to the BINSR which has already been submitted, I would use the form I have attached titled "Amendment to the BINSR." You can make any changes on this form and have both parties sign. We do not want to use an actual Addendum since the lender gets copies of all Addendums, we want to avoid that. The lender does not need to have a copy of the "Amendment to the BINSR."
CANCEL: SEE NOTICE FORM...Q: I have a listing under contract that is set to close 5/8. My Sellers are now considering canceling because the Buyer is no longer allowing them to leaseback the home after a leaseback agreement had been signed outside of our contract. CANCEL ON HOA DISCLOSURES: Notice/Disclosure Form: Buyer has reviewed and hereby gives seller notice of buyers disapproval of HOA disclosures. Therefore, Buyer elects to cancel the contract dated xx/xx/xxxx for the property located at 123 Main Street, Tempe, AZ as per lines #42-43 of the HOA Addendum (see attached). Buyer requests that Earnest Money be immediately released from escrow and returned to Buyer. Signed____ Dated______.
OR Here is the cancellation language we discussed. Use the Notice/Disclosure form which is on zipForms. This is a unilateral cancellation so only the buyer needs to sign off on the form. Please call with any questions. Jeff. CANCEL ON HOA DISCLOSURES: Buyer has reviewed and hereby gives seller notice of buyers disapproval of HOA disclosures and parking restrictions (or “we have decided we do not want to live within an HOA community.” or x). Therefore, Buyer elects to cancel the contract dated xx/xx/xxxx for the property located at 123 Main Street, Tempe, AZ as per lines #42-43 of the HOA Addendum (see attached). Buyer requests that Earnest Money be immediately released from escrow and returned to Buyer.
CANCELLATION NOTICE, DISAPPROVAL OF HOA DISCLOSURES: Notice/Disclosure Form: As per the purchase contract dated xx/xx/xxxx and the HOA Addendum which was attached to and made a part of said contract, and signed by both seller and buyer, buyer hereby gives notice of disapproval of HOA Disclosures (CC&R’s, restrictions, financial disclosures, monthly HOA fee’s, etc, etc.) and elects to immediately cancel the contract. This cancellation is within buyers unilateral rights as per the HOA Addendum, page two, line #’s 42-43. Effective immediately, please cancel escrow number 123456 and return the earnest deposit in full to the buyers.
CANCEL ON HOA DISCLOSURES: Used this 5/1/2020: Here is the cancellation language we discussed. Use the Notice/Disclosure form which is on zipForms. This is a unilateral cancellation so only the buyer needs to sign off on the form. Email the signed form to title and the other agent, let them know your buyer is cancelling after reviewing the HOA disclosures. Please call with any questions. Jeff. CANCEL ON HOA DISCLOSURES: Please edit this language to meet your needs! “Buyer has reviewed and hereby gives seller notice of buyers disapproval of HOA disclosures, CC&R’s and additional documents, including parking restrictions (sections 3.3 and 3.8, attached). Due to excessive restrictions, buyers have decided they do not with to live within an HOA community. Therefore, Buyer elects to cancel the contract dated xx/xx/xxxx for the property located at 123 Main Street, Tempe, AZ as per the buyers unilateral right outlined lines #42-43 of the HOA Addendum (see attached). Buyer requests that Earnest Money be immediately released from escrow and returned to Buyer.”
CANCEL LISTING: WHAT PAPERWORK? Q: I currently have the home listed for sale (open transaction right now with HomeSmart) but want to cancel the for sale listing...what paperwork do I need to cancel this listing? A: To cancel your listing, use the sold/change form (zipForms), 1) Fill out and have your client sign the sold/change form, 2) cancel in the MLS, 3) Upload the form to your HomeSmart Transaction File. We will cancel the HomeSmart File once the form is uploaded. CANCEL: LOAN COST, FINANCING, INTEREST RATE, Unable to get interest rate originally qualified for: Attach copy of original prequalification form plus copy of loan estimate from lender: Use unfulfilled loan contingency notice: Buyer prequalified at an interest rate not to exceed 4.75% on a conventional loan. Unfortunately, lender is now unable to offer prequalification rate to the buyers. See attached prequalification and loan estimate. Buyer disapproves of higher interest rate than pre qualified for.
CANCEL, MINOR ISSUE(S): NOTE FROM TITLE: We will honestly move forward with whatever agreement you and the buyers agent come to on this. But note that before we can do a hold back the buyers lender will have to authorize the holdback. And we do have to hold 1.5 times to total amount on the estimate. It's really up to the parties...will the prepaid invoice satisfy the buyers? If not, then an addendum will need to be drafted as stated by title. Either way, whatever they want to do is fine with us. Q: One last question if plumbing company won’t take prepayment can buyer cancel? A: Probably not...I looked at the dollar amount of the repair, seems to be around $695.00. A court would probably not let a $335K transaction cancel over $695, rather the buyer would close and pursue any legal remedies outlined in the purchase contract (as long as the house is "livable" and there is no imminent danger). That being said, the buyer could issue a CURE notice and delay closing for three days, but cancelling would most likely create additional legal issues for both parties. Plus, we never know how the title company will decide on these issues. (NOTE: CAN YOU “RE-CURE” BUYER WHO CURED SELLER FOR MINOR ITEM, THEN REFUSED TO CLOSE...?)
CANCEL, MUTUAL: “Seller and Buyer mutually agree to cancel this Purchase Contract dated xx/xx/xxxx. Seller agrees to immediately reimburse Buyer for inspection fee ($350) and appraisal fee ($450) for a total of $800. Earnest Money to be immediately released back to the Buyer.”
CANCELLATION, SALE FILE/BROKER FILE NOTE: “In order to cancel this file in the HomeSmart system we will need 2 things. 1) You will need to upload a copy of all contract documents you have pertaining to this file, including the document used to cancel the transaction (ie. BINSR, loan denial). 2) In addition, please upload the letter or cancellation instructions from the title company stating that they have cancelled the file and the disposition of the earnest money as well. If mutual cancellation instructions were signed by both Buyer and Seller and it indicates who will receive the earnest money, that will work as well.” The mutual cancellation form can be found in the downloads link in your RSA Portal. Please be sure to have both the Buyer and Seller sign this form.
CANCEL: SALE FILE: (Broker Note): Q: I have never cancelled a sales transaction and need some guidance on what to do on my end in regards to the HomeSmart portal. A: You will need to upload to the sale file the following two documents to cancel sale: 1) A copy of the document that is being used to cancel the transaction (ie. BINSR, loan denial, addendum). A mutual cancellation form can be uploaded in place of the two forms of cancellation. This document can be found in the downloads in the HS system. Please have both the Buyer and Seller sign this form. A mutual cancellation form from Title is also acceptable in place of two forms. 2) A copy of the notice or cancellation instructions from the Title company stating that they have cancelled the file and the disposition of the earnest money. If earnest money was never opened, please upload a missing paperwork form explaining this in place of the Title notice. The missing paperwork form can be found in the downloads on the HS system. NOTE: Let us know when those two documents are submitted and we will cancel the sale file for you. NOTE: The listing will stay as ACTIVE, but the sale file will be cancelled.
CANCEL: SEPTIC ADDENDUM CANCELLATON LANGUAGE: “After reviewing the septic inspection report (received xx/xx/xxxx) and after careful consideration and analysis, and investigating repair, maintenance and replacement costs, buyers hereby elect to immediately cancel this contract as per their unilateral right per line #’s 27-28 of the On-Site Wastewater Treatment Facility Addendum with EM Refunded to Buyer(s).” Ruled in our favor March 23, 2021, Argument: The seller feels that the buyer's cancellation of the contract for Blue Coyote is not a valid reason. Seller requests earnest money deposit of $5,000 to be released to Marge Dorava as soon as possible. Please see the attached Cure Period Notice, Purchase Contract, Septic Inspection Report & On-Site Wastewater Treatment Facility documents for 13327 N Blue Coyote Trail, Fort McDowell, AZ 85264. Reply: I know this is unfortunate but this is an invalid cure. Per lines 27-31 of the On-Site Wastewater Treatment Facility Addendum, buyers are within their right to change their minds and no longer wish to own this property with septic and are entitled a return of their EM.
CANCELLATION: SIGNATURES, WHO SIGNS? Seller and Buyer sign, they are the parties to the contract!
CANCEL WITHOUT CAUSE: Q: Can client (seller or buyer) cancel the contract without cause…? A: NO. Neither party can unilaterally cancel the contract without cause. Your client (seller or buyer) should be advised in writing (email) to seek legal counsel since canceling now would be a breach of the contract terms, and could come with legal and/or financial liabilities. If the buyer cancels without cause, the Seller can take the earnest money as liquidated damages, plus the seller “may” pursue the Buyer for additional damages. The lawsuit route doesn't happen that often, but they need to know it's possible. The first step is to make sure the seller is 100% certain they want to cancel. If yes, then ask if they would like to propose a “mutual cancellation” whereby they would offer the EM as an incentive for the seller to cancel. If the seller accepts that great, complete the mutual cancellation paperwork t cance. The seller might try to negotiate a larger settlement to sign the mutual cancellation. If the seller refuses the mutual cancellation but the buyer still wants to cancel, make sure you remind them to speak with an attorney. If they formally instruct you to cancel, you will prepare the cancellation on the Notice/Disclosure form that's on Zipforms or TransactionDesk Say something like "Buyer hereby elects to immediately cancel this contract.” Have the Buyer sign and send to both title and the other agent. Get the escrow cancellation letter right away for your HomeSmart File, and be be sure to note the disposition of the EM. Be transparent with all parties during this process. If the seller is in breach, the buyer could sue for “specific performance” and attempt to get a legal judgement against the seller and possibly force them to sell the property. Or, the buyer could pursue monetary damages. CANCEL WITHOUT CAUSE: Q: We are well past inspections, appraisal came in and lastly we have clear to close!!! This is all great stuff right….My client is now freaked out about the aluminum wiring and piggy tailing with copper and tells me that she would like to have an electrican out to review the electrical.. She is a professor at ASU and understands that she was offered to have this done during inspections and elected not to. She tells me that if she doesn’t hear what gives her comfort, she is going to cancel the sale and is willing to lose her earnest money of $2,500. Besides loosing the earnest money, what recourse would the seller have? Seller is a licensed real estate agent as well. A: Hi Kim, section 7b of the PC outlines what might happen if the contract is breached. Typically, the Earnest Money is forfeited to the seller, however, there is always a possibility that the seller could try to claim additional damages, that would be getting into the "legalities of contract breach" and it would be hard to predict the outcome if that happens. Hope it all works out for you and your client. CACNEL, WITHOUT CAUSE, DOCUMENTATION: Q: I just had a Realtor reach out on day 2 of the inspection period and tell me her clients got denied their loan. She won't send us a BINSR or anything. We have another offer. What do we need to do to make sure we do this properly? A: There needs to be an official document to cancel the contract so they need to send you the Unfulfilled Loan Contingency or something along those lines. The contract doesn't just go away based on the agent reaching out, you know? There has to be a documented canceling of the contract. (NOTE: There is nothing contractually to cure them on at this point, let them know you need that document to cancel both escrow and your HomeSmart file...and ask them to do that quickly as you have another offer to consider). CANCEL, WITHOUT CAUSE: GET AN ATTORNEY! Good Morning X, you need to write an email to the Seller letting her know that you strongly advise her to speak with an attorney about the legal consequences of canceling the contract at this point. Because the contract is a legally binding document, if she breaches it by canceling, the Buyer may have legal remedies to be able to pursue against her. There is also a process called specific performance that is available to Buyers when a Seller does this, where the Buyer could file a lawsuit to force the contract to be upheld, meaning she could be legally forced to sell. That's why she needs to consult an attorney before making that choice. If she still tells you to cancel the contract, you can, but she needs to have all the information before doing that. CAPITAL GAINS AND THE SALE OF YOUR HOME, IRS https://www.irs.gov/taxtopics/tc701.html CAPITAL IMPROVEMENT FEE (from HOA Addendum): Negotiable, typically paid by Buyer, some HOA’s mandate paid by buyer...why would seller want to pay on back end if they paid when they were the buyer on the front end as a buyer? CASH BUYER: Q: I have a buyer client from out of town, that will be a cash buyer. How would I suggest to my buyer to hire an appraiser to appraise the home, to make sure that their cash offer is the best offer? Or, how do I express to my client that we are basing their offer all on COMPs? A: Hi Myrtle, I would just email them this information. Like you said, you'd send them the comps for the area that pertain to that house, and you ask what they would like to offer. That way it's not you putting a number in their head. You can let them know that if they want, you could add an appraisal contingency into the contract, but it's up to them. I'd discuss the fact that often times with cash offers, Sellers aren't overly fond of having an appraisal so they have to weigh that as well. Even if you don't put an appraisal contingency into the contract, if you jump on it quick and early in the inspection period, you can have an appraisal as part of your inspections, and even cancel if it comes in low. That is as long as it's during your 10 day inspection period. The reason for that is that the contract says that the Buyer will perform all inspections and investigations that they deem necessary to determine the condition AND value of the home, so you can stand on that language in a cash sale. (line 215 of the contract) CBS CODE: http://www.ekeyprofessional.com/selfHelp/Pages/activeKey/AK_cbs.htm |
