Does checking the wrong box on a home offer termination form make it invalid?

There was an instance where a home buyer decided to terminate their offer on the last day of the due diligence period.

The buyer’s agent filled out Form 350-T (Termination of Contract (Form 2-T) by Notice to Seller from Buyer. The buyer agent got the buyer to sign it and sent it to the listing agent before the 5:00pm deadline.

Terminating by the due diligence date means that the buyer is entitled to get back their earnest money deposit.

The next day, the listing agent claimed that the contract is not terminated because instead of checking the box indicating that the buyer was ‘terminating as of right during the Due Diligence Period’, the buyer’s agent accidentally checked the box indicating that the property was ‘not in governmental compliance’.

Is the listing agent correct, or can the buyer get their Earnest Money Deposit back?

The answer: The contract was timely terminated during the Due Diligence Period, and the buyer should receive a refund of their Earnest Money Deposit.

Form 2-T, the Offer to Purchase and Contract, states that the contract may be terminated by a buyer’s “delivering to Seller written notice of termination (the “Termination Notice”) during the Due Diligence Period”.

No particular kind of written notice is required, and using a standard form to terminate is not mandatory, even though it is strongly recommended.

The only requirements for the Termination Notice are that the notice (1) be in writing and (2) evidence a clear intent to terminate.

Form 350-T is a unilateral termination form. It does not require both parties to sign to effectuate a termination. Instead, the pre-printed language in paragraph 2 of Form 350-T states that “Buyer hereby terminates the Contract for the following reason(s) . . .”

This preprinted language, standing alone, is enough to satisfy the requirements for the Termination Notice.

While checkboxes with reasons in Form 350-T are often helpful to the parties in winding up a transaction, they are not required or necessary for purposes of termination under Form 2-T.

Once the listing agent received the Form 350-T, the contract was terminated, regardless of what reason was given in the checkboxes.

The result would be the same if the client signed a Form 350-T and delivered it to the seller with no boxes checked at all.

Since the contract was timely terminated by Form 350-T, the Earnest Money Deposit should be refunded to your buyer.