The Release Of Buyer Contingencies
Seller’s: Don’t Leave Yourself Hanging!
Lately, I’ve been seeing buyers agents being more aggressive with regard to voluntarily sending the full contingency release to sellers. While this does create some consternation between the parties, there is ONE main reason why this is happening.
Releasing all contingencies of sale puts the buyers deposit at risk if for some reason they have to cancel
This is an “active” release and not something that happens automatically so the agent representing the seller, or listing agent, must send a 24 or 48 hour notice to perform to release all contingencies or the seller may cancel the sale.
This protects the seller’s interests and allows them to “force the hand” of the buyer should they balk at releasing all contingencies.
The Seller Has Very Little Control
The control that a seller has extends to reaching an agreement or a “meeting of the minds” with a buyer depending on the terms of the agreement. After that, a seller may not cancel the sale without risking legal ramifications. For the entirety of the discovery period, typically the first 17 days, the seller must simply wait for the buyer to do their due diligence.
The seller’s disclosures, a home inspection, pest inspection, pool inspection, appraisal and other relevant inspections are performed during this period to help the buyer to feel confident in their purchase.
The Buyer’s Right To Inspect
Once the 17 day due diligence period is over the buyer, as agreed, SHOULD send the seller a release form removing the applicable contingency of sale. But most often, that won’t happen. The listing agent has to be aware of the end dates of the contingency periods then deliver to the buyers agent a notice to perform within the terms of the agreement in the event the buyer fails to send the appropriate document.
Normally, the time frame for buyer response to a notice to perform is defaulted to 48 hours however that can be changed to whatever time frame the seller would like when the initial agreement was reached. I generally recommend 24 hours as you want to know as soon as possible if the buyer intends to complete the sale or not.
Don’t Give Up Your Options
When the time frame for the buyer response has elapsed and no contingency release has been delivered, the seller now has the option to cancel the sale or not. A good listing agent will send this document out automatically, as soon as contractually possible, without ever asking for the contingency release from the buyers agent. This is how I handle it. Notices to perform go out as early as the agreement will allow, typically 48 hours prior to the contingency date.
If you’re not hiring me, and you should be , ask your listing agent if they intend to send out a notice to perform to release each contingency. It’s critical to your position in the transaction to make sure to keep your options open especially when you don’t have many to begin with. Your net bottom line depends on it.
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