Title Tip: What Happens When You Rescind an Offer to Purchase?
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Shopping for a home is a bit like dating. Buyers, like daters, are looking for that perfect match. But just because you fall in love doesn’t mean they’ll love you back. Getting down the aisle to happily ever after can take some effort. And you may have to kiss a few frogs in search of the ideal mate.
So what happens when you need to jilt that potential lover – or seller — before your first real encounter? It’s not the love connection you thought it could be and you’ve changed your mind?
An offer to purchase a property can be rescinded or withdrawn at any time before it is accepted. For a rescission to be effective it must be given as a notice in writing and received by the other party. There is a Texas Association of Realtors form that can be used called Notice of Withdrawal of Offer.
Rescission of an offer is not effective until it is delivered to the other party. And it must be delivered before the offer has been accepted. Once an offer is accepted, it becomes a contract. Then it requires more effort to break up.
Canceling After a Signed Contract
A written contract that has been signed and executed cannot be withdrawn like an offer can. It must be terminated in accordance with one of the contingencies in the contract that allows for termination. A contingency for terminating includes an option period.
What happens if a buyer verbally withdraws their offer but by the time they actually deliver the written notice, the seller has signed and accepted the contract? Once a seller has notified a buyer that their offer has been accepted, if the buyer wants to get out of the contract, they should pay the option fee and then terminate during the option period.
The same is true if a buyer makes an offer that is ignored and the seller accepts it several days later. Maybe the seller was negotiating for a better offer that didn’t work out. Kind of like waiting for that Saturday night date.
Like Ross or Rachel in an episode of Friends, you don’t want to date two people at the same time. It’s best to ensure you’ve ended any commitment to a property before moving on to the next one.
Deadlines Can Help
Many Realtors consider it good practice to put a deadline for response with their offer. A deadline for response should be clear and state the time and date that the offer is good until. If an offer does not have a deadline, then it should be rescinded in writing if the seller has not responded and the buyer no longer wants to enter into a contract with that seller.
Remember that for an offer to become a contract, it just has to be accepted. The seller may simply sign the offer and confirm that it has been accepted. That confirmation could be a phone call or written delivery.
As the buyer, if you swiped right when you should have swiped left, you’ll want to take that back right away – in writing.
Your perfect home may be out there somewhere. Lots of folks keep looking until they find it. Meanwhile, you may need to stay where you are. Or as they say … love the one you’re with.
The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.
Lydia Blair (formerly Lydia Player) was a successful Realtor for 10 years before jumping to the title side of the business in 2015. Prior to selling real estate, she bought, remodeled and sold homes (before house flipping was an expression). She’s been through the real estate closing process countless times as either a buyer, a seller, a Realtor, and an Escrow Officer. As an Escrow Officer for Allegiance Title at Preston Center, she likes solving problems and cutting through red tape. The most fun part of her job is handing people keys or a check.
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I live in Wisconsin and had an offer on a home get accepted yesterday… Told my realtor today I wanted to cancel, since felt the offer was what he wanted me to put kinda felt pressured to put a higher amount than the number I had given, feel he may not be working for me and want to back out. What must I do? I only signed something prior to the accepted offer and did not give any earnest money yet
The real estate laws in Wisconsin are different than those in Texas. I don’t know what your contract allows you to do. Your agent should be able to explain your options. You always have options – you may not like all of the options, but there are some.
I gave the title company $2,000 earnest money and the money was drawn on my checking account and now in escrow or held by the title company. Later, I backed out of the purchase, giving up my earnest money. That is all well and good and as it should be. After that, my agent sent me a “rescission agreement” contract to sign. It stipulated that half of the earnest money was to go to the agent and the other half to the sellers. This didn’t look right to me, so I refused to sign it. The agent told me she would have to begin legal action against me if I didn’t sign it. I told her that if the sellers signed it first, I would also sign it, but they would have to agree with this before I did. She simply replied “You must sign the document”. That was a week ago and I haven’t heard from her yet. As far as I’m concerned, there is no law requiring ANYONE to sign a document of any kind, here in the free world. If you can shed any light on this, it would be greatly appreciated.