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I think this might be an example where location makes a difference. I'm looking at a contract from a house I bought in California (not a current transaction, so the wording may have changed on the current form), and it says:
"By the end of the time specified, buyer shall deliver to seller a removal of the applicable contingency or cancelation of this agreement."
This reads to me that the time period expiring without a contingency removal or cancelation puts the buyer in breach, but does not remove the contingency.
I think this might be an example where location makes a difference. I'm looking at a contract from a house I bought in California (not a current transaction, so the wording may have changed on the current form), and it says:
"By the end of the time specified, buyer shall deliver to seller a removal of the applicable contingency or cancelation of this agreement."
This reads to me that the time period expiring without a contingency removal or cancelation puts the buyer in breach, but does not remove the contingency.
I am not a lawyer and it’s not our contract but my reading of that is the buyer can choose to remove the contingency or cancel the contract. It is BUYER'S contingency, not seller's. Is there a next sentence that talks about what happens if the buyer does neither of those things? That it naturally expires?
Last edited by Diana Holbrook; 04-07-2021 at 02:47 PM..
A lot of incorrect info from the peanut gallery here. The blog post is poorly worded IMO, and Diana is correct.
Thanks Brandon!
Quote:
The contract of sale dictates who, when, and why a contract can be terminated, but I've never seen one that allows a seller to unilaterally cancel over a repair request. In most contracts, the buyer may request a repair, and if the seller refuses the repair, the buyer has the OPTION to cancel or proceed as is. Same thing if the appraisal comes in short in most contracts -if the buyer and seller fail to renogaitiate to a mutually agreeable sales price, the buyer has the option to pay the difference or cancel the contract. Seller with title issues is another one where the buyer can choose to wait it out.
Some clauses I've seen that allow the seller to cancel revolve around the buyer not meeting obligations, such as failure to deposit earnest money, begin the loan process, be denied a loan, etc.
I actually had a seller try to pull that garbage one time where we submitted a repair addendum and seller told us no, and that he was cancelling the contract. We forced him to sell it to the buyer "as-is" becuase the buyer still wanted to proceed even without repairs.
I've had our own seller become disenchanted with the process (during covid) and with the buyer, and new maintenance issues that popped up while under contract, and want to cancel. I had to explain that it really didn't work that way... and that IF he wanted to cancel, he may need an attorney, because our contract doesn't allow seller to just change his mind. Buyer may let him out, but it may cost him.... her costs, and other damages. Buyer wanted to close. Seller got past it and closed.
This is important for people to understand. Buyer holds the cards on these contingencies... They are buyer contingencies, not seller contingencies. And it has to be that way. Buyer has to be able to cancel based on the contingency, that's the whole point of a contingency, but the contract does have to depend on a willing seller.
In our career, we've had one seller who requested to cancel after inspections were done where we represented the buyer. Seller just decided they didn't want to move. We talked about it... what to do. Our buyer clients were committed to moving from their place, it had sold. So we negotiated reimbursement for their costs for inspection, but also for rent and added expenses for a couple months until they could find another place. Sometimes getting out can be negotiated for sellers, but it's not without cost or consequence.
Last edited by Diana Holbrook; 04-07-2021 at 03:08 PM..
In our career, we've had one seller who requested to cancel after inspections were done where we represented the buyer. Seller just decided they didn't want to move. Our buyer clients were committed to moving from their place, it had sold. So we negotiated reimbursement for their costs for inspection, but also for rent and added expenses for a couple months until they could find another place. Sometimes getting out can be negotiated for sellers, but it's not without cost or consequence.
Our sellers changed their minds when we bought this house....they were going to move back where they came from before realizing that wasn't feasible; also their grown child lived with them and landed a "dream job" (that she stayed at for 2 years...the entire family can't make up their minds) so they decided to stay. I'm sure without a lawyer that they trusted advising them we would have had major issues with them. If you can believe it they ended up buying a house back in this same neighborhood. And every time I see the husband he tells me they are moving soon....we've been here almost 11 years. Some people....
Not in this case. It was the seller who got an over market bid.
That's how it may look but seller doesn't *typically* have that option. They refused and/or negotiated an out and got buyer to cancel. Sellers don't *typically* have the right to cancel contracts simply because they get a better offer.
Our sellers changed their minds when we bought this house....they were going to move back where they came from before realizing that wasn't feasible; also their grown child lived with them and landed a "dream job" (that she stayed at for 2 years...the entire family can't make up their minds) so they decided to stay. I'm sure without a lawyer that they trusted advising them we would have had major issues with them. If you can believe it they ended up buying a house back in this same neighborhood. And every time I see the husband he tells me they are moving soon....we've been here almost 11 years. Some people....
Oh dear!
In our case, We talked about it... what to do, and they decided they didn't want to force the seller to sell... as long as they could get their increased costs covered, they'd be OK.
As an aside, we could have pressed for our commission. We brought a ready and willing buyer, our commission was due. We didn't. We eventually found them another place. But that is another cost to consider, for a seller who just decides to cancel.
That's how it may look but seller doesn't *typically* have that option. They refused and/or negotiated an out and got buyer to cancel. Sellers don't *typically* have the right to cancel contracts simply because they get a better offer.
That's not how it was told to me. The buyer did not cancel. The seller did.
Is there a next sentence that talks about what happens if the buyer does neither of those things? That it naturally expires?
I found a copy of a blank one (slightly different revision) online if you're curious (totally understand if you don't feel like wading through another state's contract just for a random forum thread!):
On page 6, section 14 covers this topic. I will not copy the entire thing here, but some excerpts that seem relevant:
"The following time periods may only be extended, altered, modified or changed by mutual written agreement. Any removal of contingencies or cancellation under this paragraph by either Buyer or Seller must be exercised in good faith and in writing."
"By the end of the time specified in paragraph 14B(1) (or as otherwise specified in this Agreement), Buyer shall Deliver to Seller a removal of the applicable contingency or cancellation (C.A.R. Form CR or CC) of this Agreement. However, if any report, disclosure or information for which Seller is responsible is not Delivered within the time specified in paragraph 14A, then Buyer has 5 (or ) Days After Delivery of any such items, or the time specified in paragraph 14B(1), whichever is later, to Deliver to Seller a removal of the applicable contingency or cancellation of this Agreement."
"If, by the time specified in this Agreement, Buyer does not Deliver to Seller a removal of the applicable contingency or cancellation of this Agreement, then Seller, after first Delivering to Buyer a Notice to Buyer to Perform (C.A.R. Form NBP), may cancel this Agreement. In such event, Seller shall authorize the return of Buyer's deposit, except for fees incurred by Buyer."
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