October 8th, 2018 at 10:29 am
In how many ways does the Notice to Buyer to Perform (NBP) differ from the Demand to Close Escrow (DCE)?
Answer #1: In at least 5 major ways.
Question #2: What are those ways?
Answer #2: The NBP and DCE are 2 notice requirements for a seller under the Residential Purchase Agreement (RPA). Here are 5 major differences between the 2 notices:
- Purpose: A seller serves an NBP to require the buyer to remove contingencies, submit a deposit into escrow, or take any of 10 other contractual actions as set forth in paragraph 14D(2) of the RPA. A seller serves a DCE to require the buyer to close escrow as scheduled.
- Number of Days of the Notice: An NBP gives the buyer at least 2 Days, as defined in the RPA, to remove a contingency or take another contractual action as specified. A DCE gives the buyer at least 3 Days to close escrow as scheduled. Either timeframe can be changed at the offer stage by inserting a different number of days in paragraph 14E or 14G of the RPA.
- Timing of Service (When to Serve): An NBP cannot be served any sooner than 2 days before the expiration of a contingency period or other applicable timeframe. A DCE cannot be served any sooner than 3 days before the scheduled close of escrow date.
- Effect of Service: Upon service of an NBP to remove contingencies, followed by the buyer’s failure to remove contingencies within the indicated timeframe, the seller can cancel, but must return the deposit to the buyer. Upon service of a DCE, followed by the buyer’s failure to close escrow within the indicated timeframe, the seller can cancel and may even be entitled to keep the deposit if the buyer has removed all contingencies and has no valid reason for failing to close.
- Service Requirement (Bonus Points): An NBP is a voluntary form that a seller may serve to notify the buyer to perform by taking certain actions. A DCE is a mandatory form that a seller must serve before cancelling due to the buyer’s failure to close escrow as scheduled.
Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of October 8, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.
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