Several agents are unclear as to how to cancel the contract under Paragraph 9(C)(3). Pursuant to the contract the buyer has 10 business days to complete any due diligence. During the due diligence period should the buyer determine, in their sole discretion, to terminate the contract the buyer may do so if they follow certain steps. It is important to note that the buyer may terminate the contract for any reason whatsoever and the buyer does not have to complete an inspection or discover a defect in the house in order to terminate.
In order to properly terminate the contract under Paragraph 9(C)(3) the buyer must complete these two steps:
- First, the buyer must provide written notice to the seller or seller’s broker that the contract is being terminated. The notice must be provided prior to the expiration of the due diligence period.
- Secondly, the buyer must provide entire copies of all inspections reports, if any, to the seller. This requires your buyer to send each and every page of the inspection reports; not just the cover page or summary. The requirement is due to the seller’s duty to update the seller disclosure form.
If your buyer fails to send the termination in writing or fails to provide the entire inspection report then the termination may not be effective. If no inspections were conducted during the due diligence period, your buyer should state so in the termination notice. If the buyer follows these simple steps, the buyer should be entitled to the return of the earnest money.