It is no secret that the word “cancellation”, when used in reference to the sale of a home or property, can strike fear in everyone involved in the deal. This fear is likely reasonable given the ramifications of a potential stalemate when the cancellation allowed by the Residential Purchase Agreement is invoked.
Disagreement over the rightfulness of a cancellation by the buyer or seller can be costly to both parties. The purchasing party may be awaiting the return of a deposit to look for and purchase a different home, while the seller could have the home tied up in escrow essentially holding the property off the market.
Simply put, avoid signing a document without a clear understanding of your cancellation rights. All parties involved should have a firm grasp on what a cancellation involves and what parameters validate a cancellation by the buyer or seller.
Fortunately, the Residential Purchase Agreement accounts for almost every contingency that could result in a cancellation by the buyer or the seller. Gaining appropriate financing, the satisfactory passing of certain inspections, and the disclosure of any issues with the property are all items that the document takes into consideration.
This allows both parties a reasonable and convenient “out” of the Agreement in the case of reasonable expectations being unmet. Thus, the right of Purchase Agreement cancellation is not something to be feared or loathed but a document to appreciate.
The Residential Purchase Agreement essentially provides protections for both sides involved in the purchase and sale of the property. If all contingencies set forth by the agreement are met, then the law dictates that the sale must commence regardless of any remorse from the buyer or seller.
In the event a cancellation is warranted and agreed upon, an Escrow Cancellation Instructions and Cancellation of Purchase Contract must be signed by both parties. These documents allow all funds to be returned, as indicated, to the appropriate parties and for the property to remain in the seller’s custody.
Obviously, the ideal scenario results in the successful transition of the property from seller to buyer but the Residential Purchase Agreement allows both parties to feel secure that if something should go awry, everyone can walk away confident their rights have been respected.