How to Terminate an Oklahoma Real Estate Purchase Contract
Parties to Oklahoma real estate purchase contracts may want to terminate their agreements based on a number of factors.
Depending on the type of transaction (residential transaction or commercial transaction), the terms of the contract, and the dates of the contract, one or both parties may have the right to terminate their purchase agreement (or they may be stuck with the unfortunate option of having to breach the agreement and suffer the consequences).
A few common reasons buyers seek to terminate real estate contracts are:
- The property of the condition is not as expected and the cost of repairing the building may be too expensive.
- The buyer was not able to obtain financing to complete the purchase.
- The seller has refused to agree to make repairs (often called treatments, repairs, and replacements or “TRRs” which the buyer feels are necessary before agreeing to close the transaction.
A few common reasons sellers seek to terminate real estate contracts are:
- The buyer has not paid the earnest money into escrow as agreed.
- The buyer is delaying closing too long or too many times.
- The seller has found a new buyer who has made a better offer.
These reasons may be valid under your real estate purchase and sale contract, or they may not be allowed without suffering default or breach. It all depends on the written terms that the parties have used.
Likewise, the terms of the contract will also set the requirements for how and when termination should be communicated. Most real estate contracts will require the terminating party to notify the opposite party in writing of their intent to terminate, and sometimes that termination notice may include a request for the release of earnest money.
In any event of termination, the forfeiting, release, or return of earnest money is often a key issue for the parties involved; the party who was not the cause of the termination usually wants to obtain possession of the full earnest money. In some cases, the contract terms will provide a clear explanation of who is entitled to the escrow funds, while other situations require the parties to negotiate with each other. The widely-used standard OREC form contracts only provide very limited terms for how to address earnest money.
When the parties dispute the earnest money, a title company may even pay the funds into a local county court clerk’s escrow account in order to remove themselves from the situation.
You may be surprised to find out how affordable it can be to use an experienced Oklahoma real estate attorney to review your contract and determine whether a termination is available under the circumstances and terms of your agreement. The attorneys at Avenue Legal Group can help you effectively structure a residential or commercial real estate transaction. In many cases, we may even be able to defer payment until your closing date to minimize your out-of-pocket expenses.
Contact Avenue Legal Group to discuss your real estate transaction and how we can help.
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