October 16th, 2023 at 4:00 pm
Multiple Choice Question: Is the buyer required to give the seller a reason for cancelling? Pick the best answer:
A. Yes, as required under paragraph 14 of the RPA.
B. Yes, as required under the buyer’s obligation to act in good faith and deal fairly with the seller.
C. No, the buyer can cancel under any of the buyer’s contingencies.
D. No, the buyer can cancel for any reason.
Answer: Answer A is wrong. The RPA does not require the buyer to give the seller a reason for cancelling.
Answer B is also wrong. It’s true that a buyer is obligated to act in good faith and deal fairly, but that does not mean that the buyer is required to give the seller a reason for cancelling.
Answer C is the correct answer. A buyer may cancel under a contingency that has not yet been removed (see paragraph 14D(3) of the RPA). The buyer must act in good faith when cancelling under a buyer contingency, but that does not mean that the buyer must give the seller a reason for cancelling (see also Practice Tip below).
Answer D is wrong. The RPA does not allow the buyer to cancel for any reason.
Practice Tip: We are unfortunately experiencing an uptick in buyer cancellations. As the agent involved, be aware that a cancellation can be difficult to handle, especially when the seller and buyer are at odds with each other. As the buyer’s agent, you should not be divulging to the seller’s side what your buyer-client’s reasoning may be, absent your own client’s permission (preferably in writing). Otherwise, you may end up doing your own client a disservice if you give a specific reason or reasons to the seller’s side, only to have an unhappy seller try to argue that the reasoning is somehow invalid. Most buyers have multiple reasons for cancelling anyway. Some reasons they may have shared with you, but others they may have not shared with you. You should not pin your own clients down to one reason or several reasons, absent their written consent.
Stay Tuned! Please stay tuned next week for some helpful tips on properly handling a buyer cancellation.
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