A month ago you were so happy. Your buyers wrote an offer on a property, and the offer was accepted. Off to the races you went, figuratively speaking! Escrow funds were deposited, the mortgage process began and inspections were lined up. Then the dreaded phone call from your buyers . . . Mr. Buyer lost his job, the property has structural problems, buyers are getting divorced . . . we’ve heard them all. And with it goes that sinking feeling in the pit of your stomach.
We’ve all been there. And many times there is nothing we as agents can do about it, so we move on. But there’s a procedure to move on . . . forms MUST be completed, the Agreement of Sale must be made null and void and escrow money has to be returned . . . to someone.
Two forms are available to deal with these circumstances; but depending on said circumstances, only one is appropriate. First let’s review the forms.
NOTICE OF TERMINATION OF AGREEMENT OF SALE
This form should be used only if NO ESCROW money has been received. It must be signed only by the terminating party and must cite the reason, supported by a breakdown in a term or paragraph in the Agreement. It also puts buyers and sellers on notice that from this day forward, buyers and sellers are releasing everyone from further liability pertaining to this contract. I’m not particularly fond of this form myself. I want everyone put on notice and everyone to sign something acknowledging the demise of this Agreement.
NOTICE OF TERMINATION OF AGREEMENT OF SALE / AGREEMENT OF SALE RELEASE AND DISTRIBUTION OF DEPOSIT MONEY
This is a two-part form, both on the same sheet of paper. As above, the termination portion requires only the signature of the terminating party and the reason for termination and supporting term/paragraph. The second part of the form (Release and Distribution) addresses the amount of deposit money held and the distribution of that money — will all of it go back to the buyer, or will the seller get a piece for their trouble (that’s a whole other article)? As long as there is money held in escrow and the agreement has no hope of resuscitation, you MUST use this double form to end this contract and distribute the deposit. This form also puts everyone on notice (as above) that all parties are released from further liability pertaining to this Agreement of Sale. I personally like this form better for the reasons stated above. I want all parties to sign and acknowledge a document that ends a contract.
The Termination stops the Agreement of Sale. The Release discharges EVERYONE from liability.
No one ever likes to see an agreement go “south”, but they do. When that happens, make sure your paperwork is all in order.
Nancy Sarley, Berkshire Hathaway HomeServices HomeSale Realty
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