Different Versions of Termination Form Signed
Dear Forms Guy: Here’s a good one for you. I’ve got a listing under contract and am holding the buyer’s earnest money deposit. The buyer and seller have had a falling out over repairs and the buyer is refusing to close. The seller says the buyer is in breach of contract and that the seller is entitled to keep the deposit, and the buyer says that she’s entitled to get her deposit back since the seller has refused to fix something the buyer claims is covered under the contract. Since there’s a dispute about the earnest money, I got the seller to sign a Termination of Contract Without Release of Earnest Money form (#391-T) and I sent it over to the buyer’s agent. Well, the buyer agent has just faxed me a copy of a Termination of Contract and Release of Earnest Money form (# 390-T) the buyer has signed that says the deposit will be returned to her. I know I can’t release the deposit, but my question is, has the contract been terminated since both parties have signed forms that say it’s been terminated? My seller is very anxious to accept another offer, and I hope you can find it in your heart to answer my question “yes”. Sincerely, Holding my breath in Hickory
Dear Holding: I advise you to exhale and sit down. Please don’t think me hard-hearted, but my answer to your question is not the one you are looking for. It’s true that the two forms contain the same wording regarding the parties’ intent to terminate the contract. However, the form the seller signed clearly evidences an understanding on the seller’s part that the parties will “agree to disagree” about their rights to the earnest money deposit, and the form the buyer signed clearly evidences an understanding on her part that she will get the deposit back. There has to be a “meeting of the minds” regarding all the elements of any agreement, and this agreement is no exception. Since the parties have evidenced very different understandings about the fate of the deposit, there clearly has been no meeting of the minds regarding all aspects of the agreement to terminate the contract, and thus, no agreement to terminate the contract has been formed. Note that just because the buyer and seller have not reached an agreement to terminate the contract, it doesn’t necessarily mean that the contract hasn’t been terminated for some other reason, such as a material breach of contract by one of the parties. Breathe easy, Hickory, and advise your client to consult with his lawyer about his legal rights to consider another contract. Signed, Forms Guy
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