DON’T BE CAUGHT WITH YOUR PANTS DOWN

Have you ever represented a Buyer that literally waits to the last second to inform you, via email, that they want to terminate a contract?  As a Realtor, what are your obligations?  Generally speaking your obligation (as Selling Agent) is to deliver the written notice of termination (or signed Release and Termination) to the Listing Agent prior to the expiration of the Inspection Period.  What happens if your Buyer decides to send you an email at 11:00 pm on the last day of the Inspection Period but you are sleeping or frankly spending time with your family and therefore cannot deliver the notice of termination to the Listing Agent on time? 

Assume for argument sake the FRBAR “AS IS” Residential Contract for Sale and Purchase was used in scenario above and the last day of the Inspection Period was not a Saturday, Sunday, or national legal holiday.  As you are probably aware Paragraph O of the “Standards” for Real Estate Transactions, provides that “[n]otice and delivery given by or to the attorney or broker . . . representing any party shall be as effective as if given by or to that party.”  In other words notice delivered by the Selling Agent to the Listing Agent is just as good as notice directly from Buyer to Seller.  This means that by the Buyer delivering a notice of termination to their Realtor prior to the end of the Inspection Period it put an obligation on the Realtor to deliver the notice to the Listing Agent prior to the end of the Inspection Period (in this case by 11:59 pm).  Technically since the notice of termination was NOT delivered in a timely fashion by the Selling Agent the Buyer’s deposit may be at risk.

However, under this scenario the timing of the Buyer’s notice of termination to their Realtor may not be reasonable and therefore may not obligate their Realtor to deliver the notice in a timely fashion.  The reasonableness standard will depend on the facts in most cases.  For example, had the Buyer delivered the notice of termination to their Realtor at 7:00 pm and their Realtor is known to work late into the evenings it may be reasonable to assume that the notice should have been delivered to the Listing Agent in a timely fashion.  So how do you protect yourself without being caught with your pants down?!

First and foremost, it would be advisable to have your Buyer not only provide you with written notice of their intent to terminate by 5:00 pm on the last day of the Inspection Period but also have them follow that email with a phone call.  If you know that you are going to be “out of pocket” on the last night of the Inspection Period you need to let your client know in writing (you see a theme here!) and inform them that any notices of termination need to be delivered to you by a time certain or you will not be in a position to deliver any notices to the Listing Agent after that time.

As always, should you have any questions or concerns on your rights, obligations, and/or duties, immediately contact your real estate attorney to ensure that you are not being caught with your pants down!

Sincerely,

Berlin Patten Ebling, PLLC

Article Authored by Jamie A. Ebling, Esq., jebling@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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