The Purchase and Sale Termination form is a simple but important step to formally terminate a Purchase and Sale Agreement and simultaneously allow the escrow agent to release deposit funds held.  While the buyer has a contractual right to terminate the agreement outlined in the contingency clauses of the Purchase and Sale agreement, the form serves as a notice of such termination and includes mutual instructions to release funds from escrow.  It is a best practice to have this form signed by both parties to commemorate the termination of the Purchase and Sale Agreement.  The buyer’s agent should immediately share this with the buyer’s lender and lawyer (as applicable).  The escrow agent can only release funds when mutually agreed upon by both parties.  If there is no dispute, it should be simple to get the form signed and shared.  It’s in everyone’s best interest.

While we have a Purchase and Sale Termination form for your convenience, some may choose to instead use our Mutual Instruction to Release from Escrow form if a buyer was negotiating inspection items in an addendum (written by a lawyer) that included termination language.  Either or both forms are fine to use to ensure a solid paper trail ending the contractual obligations of all parties.

If the seller balks at signing the release, the seller should be advised that they will NOT get any money until / unless they prove the buyer did not have any right to terminate the agreement.  If the seller refuses to allow the buyer to terminate as promised in the Purchase and Sale agreement due to the inspection, financing or other contingency, the buyer would likely bring a breach of contract lawsuit against the seller to collect funds and the seller could incur additional legal costs associated with collections.

Either way, the escrow agent has protection by either releasing funds based on written, mutual instructions via a termination form or holding the funds until the parties agree or the courts decide.