In Texas, when buying real estate, there are couple of predetermined contractual triggers for a buyer to Terminate the Residential Contract. The most common of the two is this paragraph:
Paragraph 23. provides an unrestricted buyer right to terminate. Unrestricted means for ANY reason. The buyer is not required to justify or explain why they are terminating.
Generally, buyers use the Option Period to have the property inspected, address any concerns and to negotiate any repair items. Request to make changes or amend the original terms of the contract can using the TREC Amendment To The Contract. The seller is not obligated to agree to amend the terms of the contract. If the seller does not agree to the buyers requested amendment(s), the buyer has the unrestricted right to terminate. The key to a successful termination is using the proper form, TREC Notice of Buyer’s Termination. (The Option Period does not give the seller the right to terminate the contract.)
The following is a snippet from the Texas Association of REALTORS® eNewletter.
Termination of contracts After completing inspections on one of my listings, the buyer requested the seller repair several items shown on the inspection report. The seller refused to do any of the repairs. During the option period, I received a Release of Earnest Money form (TAR 1904) signed by the buyer and his agent showing the earnest money being returned to the buyer. No Notice of Buyer’s Termination of Contract form (TAR 1902) has been received by the seller or the listing agent. Does the Release of Earnest Money form satisfy the buyer’s notice of termination requirements under Paragraph 23 of the contract?
Paragraph 21 of the TREC contract requires that all notices from one party to another must be in writing. TREC has promulgated the Notice of Buyer’s Termination of Contract form for use when a licensee is helping a buyer provide the appropriate notice to the seller of the exercise of his termination option. While a buyer can use any form of written notice to terminate the contract, a buyer’s agent asked to help the buyer give the appropriate notice should use the promulgated form.
When the appropriate box of the form has been checked, the TREC Notice of Buyer’s Termination of Contract form makes it clear that the buyer intends to and is giving the appropriate notice to the seller of his election to terminate the contract under the provisions of Paragraph 23. While one might believe that the buyer has made the decision to terminate the contract under his termination option by sending the seller or his agent a signed Release of Earnest Money form, showing the earnest money being released to the buyer and indicating a release of all rights or liabilities under the contract, a court might not agree that this writing satisfied the buyer’s notice requirements under Paragraphs 21 and 23 of the contract. The preferred practice would be for a buyer’s agent to have a buyer who intends to exercise his termination option under the provisions of Paragraph 23 use the TREC Notice of Buyer’s Termination of Contract form and send the signed form to the seller at the address specified in Paragraph 21 or by facsimile as specified in that paragraph. The Release of Earnest Money form could be signed and included with the notice form to facilitate the execution of that form by the seller.
Practice Note: This same procedure of sending both the TREC notice and the release of earnest money form to the seller can be used when the buyer is giving notice to the seller of the termination of the contract under any paragraph of the contract or any contract addendum.
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