Can an offer be withdrawn even if all parties have signed it?

QUESTION: Last Friday, my client made an offer on a property, and the listing agent indicated that they sent the offer to the seller for their review. When Monday came around, my client had changed their mind and informed me that they wanted me to withdraw their offer. I immediately emailed the listing agent, and told him that the buyer was withdrawing their offer. The listing agent emailed back and said that it was too late, because the seller had signed an hour before my email was received. Are we under contract? Does my client have to pay the Due Diligence Fee?

ANSWER: You timely communicated the buyer’s revocation, and the contract is not effective. Your client does not have to pay the Due Diligence Fee.

Paragraph 1(g) in the Offer to Purchase and Contract (Form 2-T) states that the contract becomes effective on the “date that: (1) the last one of Buyer and Seller has signed or initialed this offer or the final counteroffer, if any, and (2) such signing or initialing is communicated to the party making the offer or counteroffer, as the case may be.” The key in your scenario is that the listing agent did not communicate the seller’s signing until after you withdrawn the offer. Without such communication, the offer was still just an offer, even though the seller had, in fact, signed it before the withdrawal.

Form 2-T further states that the Due Diligence Fee must be made “payable and delivered to the Seller by the Effective Date.” Since there is no Effective Date here, the Due Diligence Fee is not due to the Seller.

It is worth noting that your immediate withdrawal of the offer was important in this case. Had you delayed in communicating your client’s wishes, and the listing agent communicated to you that the seller had signed, the contract would have become effective (even if you had not yet received a fully executed copy of the contract). At that point, withdrawal of the offer would have no longer been possible. Listing agents should also note that communicating acceptance is a critical step in the process, and it must be done as soon as possible once the seller has signed.

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