Negotiating the amendment of a contract

QUESTION: My buyer client is under contract. Due to a delay in the loan process, I notified the listing agent that the buyer needed to delay Settlement for two days. The seller demanded that the buyer pay an additional Due Diligence Fee of $1,000.00. I advised the buyer that wasn’t necessary because she is entitled under Form 2-T to a delay of up to seven days, but she decided to do it anyway because she wants the house very badly. I sent a signed Form 4-T to the listing agent providing for a $1,000.00 increase in the DDF. I then got a call from the listing agent saying that the seller had increased their demand to $2,000.00! That didn’t sit well with the buyer or with me. She decided to offer an Additional Earnest Money Deposit of $1,000.00 as a gesture of her good faith but no additional DDF.  I sent a second Form 4-T reflecting her new proposal, and stated in my email that the buyer was no longer willing to pay any more DDF. The listing agent just sent the first Form 4-T signed by the seller and demanded that the buyer pay the $1,000.00 additional DDF. Does the buyer owe it?

ANSWER: No. Just like the contract formation process, if an offer to amend a contract is rejected, or if it is withdrawn before it is accepted, it “kills” the offer to amend and the party to whom the offer was made has no power to then accept it. An argument can be made that the listing agent’s call to inform you that the seller was increasing their demand to $2,000.00 in additional Due Diligence money constituted a rejection of your buyer’s offer to pay $1,000.00 in additional DDF. But in any event, your subsequent email to the listing agent, in which you informed the listing agent that the buyer was willing to pay an Additional EMD of $1,000.00, but was no longer willing to pay any more DDF, clearly operated to withdraw the buyer’s initial offer to increase the DDF by $1,000.00, thereby eliminating any ability for the seller to then accept it. Of course, the fact that the buyer’s offer to amend the contract was withdrawn before it was accepted has no impact on the continuing validity of the existing contract.

It is important that you stated in your email that your client was no longer willing to offer an additional DDF. Had you not done so, the answer to your question might not be so clear. Your situation underscores the importance of brokers taking care to clearly and timely communicate their clients’ intentions to withdraw or revoke an offer, whether it’s during the contract negotiation process or during any later negotiation to amend an existing contract.

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Filed Under: Contract Law,