What do you do if your client sends a Termination & Release (T&R) and the other party not only doesn’t sign it but then sends one of their own? The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below.
Terminating a contract is never easy, especially when there are differences of opinion between the buyer and the seller. In real estate, the process of terminating a contract can be complex, particularly when it comes to the disbursement of earnest money. In this blog post, we will explore the issues that can arise when one party terminates a contract, and how disagreement on the disbursement of earnest money can cause confusion and delays. We will also provide some tips for agents to avoid these issues and ensure that the appropriate disbursement of earnest money is made per a terminated contract.
The Termination and Release Agreement
When a buyer terminates a contract, they typically send over a Termination and Release (TNR) agreement to the seller. In the Georgia Association of Realtors (GAR) Purchase and Sale Agreement, the termination notice and agreement to disburse the earnest money are contained on one document. This can cause confusion when the parties disagree on the disbursement of earnest money.
The Need for Agreement on Earnest Money Disbursement
Although the termination notice is unilateral and only requires one party’s signature, the agreement to disburse the earnest money needs both party’s signatures. If the seller does not agree to disburse the earnest money to the buyer, then the seller can send their own TNR and a separate agreement to disburse the earnest money. This discrepancy can cause confusion and delay in the disbursement of earnest money.
What Happens When the Parties Don’t Agree
When a broker is holding the earnest money and the parties don’t agree, the broker will typically do a 10-day letter or go through the contract to determine what happened. This can cause a delay and confusion, as the broker needs to figure out who terminated the contract and how.
How to Avoid Disagreement on Earnest Money Disbursement
To avoid disagreement on earnest money disbursement, the listing agent should strike through the disagreement and send it back to the buyer’s agent. If there is still a disagreement, it’s important for the agents to pick up the phone and talk to each other to try and figure it out. This can avoid delays and ensure the appropriate disbursement of earnest money per a terminated contract.
In conclusion, terminating a contract can become more complicated when there are disagreements on earnest money disbursement. The GAR Purchase and Sale Agreement contains both the termination notice and agreement to disburse the earnest money on one document, which can cause confusion when the parties disagree. To avoid delays and confusion, it’s important for agents to strike through any disagreements and pick up the phone to try and figure out a resolution. Ultimately, this will ensure that the appropriate disbursement of earnest money is made per a terminated contract.
Watch the entire video for more information here: