Looking to cancel a contract? Perhaps you represent the buyer and the buyer wants or needs to cancel. Or, perhaps you represent the seller and the buyer has not performed in the allotted period of time.
There are four reasons that a buyer can cancel the contract. If handled correctly, the buyer would receive his deposit back. At the risk of oversimplifying, the four reasons are on loan, appraisal, disclosures, and inspections. But, the cancellation must be completed in a timely manner. If not done within the appropriate time frames or if contingencies have been removed, the buyer would risk losing his or her deposit.
Here’s how to actually cancel a contract: you use the Cancellation of Contract form in zipForm® Plus. Then, once you have the form, you need to complete it correctly.
There are two sections on this form: cancellation of contract and cancellation of escrow. If you have an open escrow, then you must complete both sections. The top section is complete by the party that is cancelling. The bottom section is to be completed by both parties.
While it may seem surprising to write about cancelling contracts, but there are so many ins and outs to correct cancellation. Be sure to read the fine print in the Residential Purchase Agreement and explain to your clients the consequences of cancellation.
If you have any questions about contract cancellations or need assistance in creating your transaction file, feel free to contact the transaction coordinating team (my team of awesome TCs) at Transaction 911.
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