To rescind or terminate – that’s the question, but what’s the difference?

Real Estate Agent with Coldwell Banker Evergreen Olympic Realty, Olympia WA

To rescind or terminate – that’s the question, but what’s the difference?

As a home buyer in Olympia, WA, you have a mutually-agreed upon purchase and sale agreement with the seller, but a situation arises during the transaction where you cannot go through with the purchase of the home.  For example, the home inspection uncovered an issue that is a deal-breaker for you.  Or maybe you discovered in the neighborhood’s covenants that they don’t allow dogs and you have three.  What do you do – do you rescind or terminate?  Is there even a difference?


A rescission restores the parties (buyer, seller, brokerages and brokers) as though the agreement was never written.  A rescission also releases the parties from any and all present or future liability.

A termination ends the agreement at that point in the agreement.  A termination recognizes the agreement (unlike the rescission) and does not release the parties from liabilities.

What to do?

I am not offering any legal advice.  Buyers and sellers and their respective attorneys need to determine the best course of action for their particular situation.  I am only commenting based on my professional experience as a Realtor.

In many and most instances, a termination is in order. 

The language in our purchase and sale agreements in Olympia, WA state in many instances that if a condition cannot be met, then the parties agree to terminate

For example with the home inspection contingency, the buyer has the option of “disapproving the inspection and terminating the agreement.”  But all liabilities are still in place.  The inspection contingency also states, “Buyer shall be responsible for all damages resulting from any inspection of the Property performed on Buyer’s behalf.”   If the buyer terminates the agreement based on an unsatisfactory home inspection, the buyer is still responsible for any damage.  (This is the language that has been agreed to in the purchase and sale agreement.)  But if the buyer chooses to rescind, then this agreement and the liabilities do not exist.    

Sellers also need to consider this as well.  In this example, if damage was done during the home inspection and the damage wasn’t readily known and was discovered weeks later, if the buyer has terminated, then the buyer is still liable for that damage.

So what is the best answer?

Ask your attorney.  This answer requires legal advice.  If your Realtor is not an attorney, do not take their guidance. 

What if the Escrow Company asks for a rescission? Or a termination?

The escrow company is a neutral third party, which cannot offer legal advice. If the closing officer requests a rescission or a termination, they are offering legal advice.  Instead, they need to ask for the instructions on how to disburse the earnest money.    

Rescission and termination are NOT interchangeable terms.  They have completely different meanings.  Make sure you understand the meanings, and consult with your attorney to determine what course of action is best for your situation.

Posted by


Francine Viola, Realtor
In Tune with your Real Estate Needs


Serving Buyers and Sellers in Olympia, Tumwater, Lacey and Thurston County, WA

Coldwell Banker Evergreen Olympic Realty, Inc.  |  Olympia, WA


Cell:      (360) 359-0689







Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

Francine, you've done a good job of walking that "oh so fine line" of giving advice, but not giving legal advice. It's a tough one. You've explained the termination and rescission topic well.

Feb 29, 2012 12:49 AM
Jordon Wheeler
The Jordon Wheeler Group - Fairburn, GA
J W Group Real Estate Sales and Service

Hi Francine,

Good post and well thought out.  SUGGEST!  Best of success to you this year!

Feb 29, 2012 12:54 AM
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Hi Debb....I'm sure my broker would have a heart attack if he read this (because he is an attorney as well) but the biggest problem I deal with is the escrow company not accepting the termination and asking for a rescission.  

Feb 29, 2012 12:54 AM
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Hi Jordan....thanks for the suggest! :-)  I appreciate your kind words.

Feb 29, 2012 01:01 AM
Nancy Conner
Olympia, WA
Olympia/Thurston County WA
Excellent post Francine! And I share your frustration with escrow insisting on rescissions to release earnest money when there is already clearly agreed to language in the contract about the parties' agreement on when a buyer can terminate the agreement, with earnest money being returned to them. Just causes unnecessary problems.
Feb 29, 2012 01:08 AM
Karen Hawkins, MBA - Langley & Surrey, BC
Royal Pro Real Estate Network - Langley, BC

Great information, Francine - you really do such a wonderful job of informing the public!  "Suggest" from me, too!

Feb 29, 2012 01:05 PM
Toronto, ON

Hi Francine - If your real estate is also an attorney, you should verify that attorney's background is in real estate law as compared to an unrelated area of law.  In that case, you may want to speak to a real estate attorney.

Feb 29, 2012 08:55 PM
Cheryl Ritchie
RE/MAX Leading Edge - Huntingtown, MD
Southern Maryland 301-980-7566

I have never seen that distinction discussed or evaluated here. Wonder if it is a difference in area laws.

Feb 29, 2012 09:01 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Francine, thanks for pointing out the difference between the two terms. Your advice to speak with an attorney before acting is a good one.

Feb 29, 2012 09:39 PM
Blatt + Cutino
Coldwell Banker Realty - Monterey, CA
Broker-Associate 831/206-8070*Call today*

But can you rescind an offer to purchase if you are in the middle of it...for example having a home inspection means you have an accepted offer and are moving forward with in my mind at that point you could cancel because of findings that you don't like....thanks for the post...the terminology is confusing.

So if a buyer cancels a purchase contract because they don't like what they have discovered about a home is there liability?

Feb 29, 2012 09:45 PM
Charlie Dresen
The Group, Inc - Steamboat Springs, CO
Steamboat Springs, CO e-Pro

Thank you for pointing out the extremely important differences in two terms that are often thought to be interchangeable, but are obviously not. This is something I'll definitely watch out for in the future to ensure one term is not inappropriately used in place of the other.

Feb 29, 2012 10:40 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Amazing the power that words can have and how people at large are not even aware of this. Good one F

Feb 29, 2012 11:14 PM
Susan Kessler
American Allstar Realty - Phoenix, AZ

My opinion is that one can rescind an offer (because that is unilateral) but a contract must be terminated based on the terms therein.  An offer becomes a contract when signed by the parties.  If that's not correct, please let me know.

Feb 29, 2012 11:19 PM
Roy Kelley
Retired - Gaithersburg, MD

Excellent information for home buyers.

I hope you are having a most productive week.

Feb 29, 2012 11:27 PM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

It's interesting how states vary in language and how contracts are supposed to be handled. Here we have cancellation of contract which is not the same as cancellation of escrow. 

Mar 01, 2012 12:32 AM
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Hi everyone and thank you for your comments.  There are options for a buyer to cancel a contract but you need to know if you should rescind or terminate because of the liabilities that stay in place or get wiped out. And I agree with Marc (#7), you need to get a real estate attorney.  

Mar 01, 2012 12:36 AM
Ron Cooks
The Real Estate Marketplace - Killeen, TX
Texas Real Estate, Ft Hood/Killeen Homes for Sale

Francine, thanks for clearing that up.  As I was reading your post, I realized that I often used the words interchangeably.  I will certainly clean up my act.

Mar 01, 2012 01:05 AM
Eve Alexander
Buyers Broker of Florida - Tampa, FL
Exclusively Representing ONLY Tampa Home Buyers

Francine, kudos to your post.  Most agents have no clue there is a difference.

Thank you,

Eve in Orlando

Mar 01, 2012 01:19 AM
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Hi Ron - I did too until this became an issue.  

Hi Eve - it's scary how much 'stuff' we are all expected to know!

Mar 01, 2012 04:26 AM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA


Very good information.  I didn't know the difference and I am grateful to you for provide a good definition of each.  Thanks.

Mar 01, 2012 05:36 AM