Question:
The Buyers are still within the Conditional Period, do we really need to Terminate the Agreement of Purchase and Sale, make a letter of explanation, or just a Mutual Release? The Seller agent is aware of the reason not to proceed and looks like not cooperating on sending back the Mutual Release form.
Answer:
The following is an example of a home inspection condition:
“This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer’s expense, and the obtaining of a report satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than ________ on the ______ day of ________________ , (a.m./p.m.) 20 _____ , that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.”
If nothing happens by a certain time, the conditional clause says specifically that “this Offer shall be null and void”. Actually, that means “do nothing” and “it’s over”. So, there no need to deliver:
- Termination document,
- Letter of explanation, or
- Mutual Release.
That’s all fine as long as you get your deposit back. However, there is an obligation to proceed with “good faith contractual performance”, That means that you cannot just weasel out of the deal. The Listing agent may be looking for a suitable explanation to prove “good faith”. And, without that, the Buyer is going to have to sue for their deposit to be returned. Consequently, a letter of explanation and a Mutual Release might helpful in an effort to reach an earlier resolution.
Brian Madigan LL.B., Broker