Who can terminate a contract?
Once a purchase contract, a contract to lease or a lease agreement is signed, it becomes a legal, binding document that if one of the parties’ defaults on their obligations, as stated on the agreement, may result on monetary loss or legal implications. Either way, it could be costly.
The only options to terminate a fully executed contract without penalty are:
- By mutual agreement
- According to contingencies on the contract that after having exercised due diligent effort could not be met.
Are clauses that allow either party, but usually the Buyer or the Tenant, to terminate the contract without monetary risk or penalty if these contingencies are not met. Some of these contingencies are already included and made part of the contract, others need to be clearly spelled out at the time the contract is prepared.
- Mortgage Denied
- Cloud in Title
- Appraisal valuation
- Sale of another property
- Subject to viewing the property
- Attorney’s approval
- Condo Documents
Contract to Lease
- Unusual provisions or conditions on the lease
- Lease execution beyond due date
- Credit check
- Approval of Condo Association
- Required repairs or conditions not met
Notice that the options to cancel a lease without penalty once executed are very limited.
How to conclude a cancellation?
- Written notification of cancellation pursuant to contingency within the time limit given on the contract is necessary. The cancellation notice must include words such as cancellation or termination.
- TIME IS OF THE ESSENCE.
- A release and cancellation must be signed by all parties.
- Copy of release and cancellation must be submitted to Escrow Agent for the refund of the deposit.
Broker Associate | Managing Director
FORTUNE CHRISTIE’S INTERNATIONAL REAL ESTATE