Do the new contract termination notice forms give additional rights of termination to buyers and sellers?

QUESTION: In the new July 2023 versions of the Termination of Contract by Notice forms (Forms 350-T, 351-T, 352-T, and 353-T), two new checkboxes have been added that are confusing to me. One of them is a notice of termination where the terminating party gives notice of termination and alleges that the other party has breached the contract, but no reason is given. The other new checkbox is a notice of termination that doesn’t allege the other party is in breach of contract or give a reason for the termination. Do buyers and sellers now have the right to terminate contracts for any reason or no reason just by checking one of those new boxes and sending it to the other party?

ANSWER: No, absolutely not. These new checkboxes are simply intended to close gaps in the current termination-of-contract-by-notice forms. Buyers and sellers oftentimes terminate a contract for reasons other than those addressed or allowed in the Offer to Purchase and Contract (Form 2-T or 12-T). The terminating party may or may not have a legal basis for terminating. For example, a buyer who believes the seller has misrepresented the property in some material way based on something discovered by their home inspector may decide to terminate the contract. The fact that they are alleging the seller is in breach of contract doesn’t make it so. The purpose of the new checkbox is to enable the buyer’s agent to provide a form that their buyer client may use to clearly communicate to the seller what they have decided to do. If the parties are unable to work out their differences, it would ultimately be up to a judge or jury to decide whether the buyer in fact had a right to terminate the contract and recover damages based on the seller’s alleged breach. It’s possible that the judge or jury might conclude that the buyer did not have a legal basis for terminating the contract and that it was the buyer, not the seller, who was in breach of contract for failing to complete the transaction!

Another example would be a seller who has decided they are not going through with a contract to sell their property, even though the buyer hasn’t breached the contract and is ready, willing, and able to complete the transaction. The seller doesn’t have any legal basis for terminating the contract, but the new “no reason” termination checkbox (the last checkbox in all four forms) may be used to clearly communicate the seller’s decision not to sell to the buyer. If the parties can’t work it out, it would then be up to the buyer to elect whether to terminate the contract and seek damages based on the seller’s refusal to complete the sale or seek to enforce the contract via the remedy of specific performance.

It is outside the scope of an agent’s real estate license to advise their buyer or seller client as to whether their client has any right to terminate a contract for a reason that isn’t clearly set forth in the contract or of the potential consequences for terminating without legally-sufficient cause. In such situations, the client should be strongly advised to seek legal counsel before using Forms 350-T, 351-T, 352-T, and 353-T to notify the other party of their decision to terminate.

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