January 30th, 2017 at 3:59 pm
A. Seller can unilaterally cancel.
B. Mutually-signed cancellation instructions are required.
C. Both A and B.
D. Neither A nor B.
Answer: The correct answer is C. The seller can unilaterally cancel, but mutually-signed cancellation instructions are generally required. This question addresses the interplay between having a contract and having an escrow. The contract itself, the RPA, gives the seller the unilateral right to cancel (but return the deposit to the buyer), after the seller has properly served a NBP and the buyer has failed to timely perform. However, an escrow officer generally will not make legal determinations, such as the parties’ rights with respect to each other. That is usually the job of an arbitrator or judge. So if the parties both agree in writing to cancel and release the deposit to the buyer, escrow will carry out those instructions. But if, for example, the buyer refuses to sign the cancellation instructions, the seller must decide how to proceed. The seller can wait, because most buyers will eventually sign the cancellation instructions to get their deposit back. Alternatively, the seller can force the issue by pursuing mediation, arbitration, and/or litigation, but the seller is well-advised to first consult with the seller’s own attorney. Depending on the circumstances, the seller may have other options as well.
-Thank you to Norman Kawaguchi (Pasadena Office) for suggesting this week’s legal tip.
Copyright© 2017 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 January 30, 2017. 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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