Is the deal dead if one party doesn’t accept an amendment?

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12/10/2014 | Author: Editorial Staff

After my buyer completed his inspection, he sent the seller an amendment to ask for several repairs. The seller responded with his own amendment that stated he would complete one of the requested repairs and that the contract would terminate if the buyer didn’t sign the amendment within 24 hours. Can the seller terminate the contract if the buyer doesn’t accept the amendment?

No. Even though a buyer or seller can propose an amendment to the contract at any time, merely proposing an amendment to a contract does not give either party a unilateral right to terminate an existing contract. The contract is only changed after the parties sign the amendment signifying their agreement. Without a fully executed amendment, the original contract remains in effect as written.

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Categories: Forms, Legal
Tags: legal, legal faq, forms, contracts, amendment, repairs


Comments

Mike McEwen on 09/05/2016

If you are trying to get your earnest money back you must send a demand letter to the title company, who, in turn, has to send your demand to the purchaser.  If the purchaser does not respond in two weeks the title company can give you your money.  If the purchaser disputes the return w/ the title company, it will send the money to the court registry and you will have to file a civil suit.  Whether or not the purchaser has performed inspections has nothing to do w/ the refund of the earnest money.  There is language in your contract that addresses some of what I am commenting about.

Joanne Dominguez on 09/05/2016

We sold a house but the payoff was more than house price and had to cancel the sell within 24hours of siging contract no inspection was done yet and now the other party will not return our emails or calls is the a no response clause

Lucy Lim on 06/28/2016

If an amendment to sell the home was past and no new amendment was enacted, signed by both parties, is the home purchase contract void?

Mike McEwen on 12/31/2014

I’ve been a licensee for 25 years and I am the broker (for 23 years).  My client totally understands the pros and cons of delivering a termination along w/ a proposed amendment.  When you are at the end of the option period the termination needs to be poised.  And, yes, the termination can be retracted.  Language can even be put in the amendment to address that issue.

Stuart Scholer on 12/30/2014

Mike,

I think you had better discuss this practice of Terminating a Contract and then “Un-Terminating a contract” with your Broker before you end up discussing it with your attorney.

Mike McEwen on 12/30/2014

Wrong, Mr. Scholer.  My buyer client completely understands the purpose of the termination.  If the seller does not sign the amendment then the termination stands.  If the seller does sign, then the buyer may w/draw his termination…...or not.

Blake Harrison on 12/30/2014

Dianna, the scenario you described, I think, makes my point I posted on Dec. 11, when this topic was first brought up….Advise your clients to put a “null and void by date/time” on their amendments before sending them.  It just like an “offer” that has to be withdrawn before it’s accepted, unless it also had a “null and void” date in special provisions.  I’ve found it to be helpful, and then there are less questions about which Amendment stands, and what the parties intended, before a second amendment is sent and “hanging” out there.

Dianna Salazar on 12/30/2014

I am in a situation where a seller did not sign the amendment my clients the buyer sent to them within option time. Then the seller sent one amendment and then a few days later a second amendment. The buyer at the last day of his option time signed both amendments and we delivered them to the proper place per the contract. Now the Sellers agent and her broker are telling me the intent was clear it was one or the other. ( never put in writing nor in an email to me)  I say we have two amendments, they were offered and we accepted and delivered.  Its $5,000 off the sales price and limited repairs. All less then we wanted in our offered amendment never accepted by the seller. We have no form for with drawl of an amendment so put a clock on it or send written notice to the place noted in the contract.

Mike McEwen on 12/12/2014

When you get down to the wire you need to submit the termination along w/ the proposed amendment; or you literally stand in the wings waiting for the last tick before midnight.

Stuart Scholer on 12/12/2014

Hello Mike….

Never deliver a Termination unless you want to terminate the contract. If you deliver an Amendment AND a Notice of Termination then you have given the Seller the right to use that Termination at anytime in the process to walk away from the deal.  Think about it!

Kate McQueen on 12/11/2014

Brian C, I think my meaning was clear, though as you point out, I shouldn’t have specified the number of days.  I think we all know that the option period is NEGOTIABLE.

The article did NOT refer to the option period, however, MY point was to add something to the dialogue.  I furthered the “scenario” to point out that since in Texas we have the use of the option period, the buyer can in fact unilaterally terminate if the seller doesn’t come to agreement with requested repairs or other issues the buyer may bring forward via amendment.

Brian C on 12/11/2014

Kate- The scenario that TAR stated above doesn’t reference a termination option. I’m curious as to why you call it “The ten day option period”. The number of days is negotiable between the parties. Not being sarcastic, just asking.

Mike McEwen on 12/11/2014

When I represent a buyer in a situation like this I will often deliver both a termination and an amendment…..particularly if the option period is about to expire.  If the amendment gets signed we go forward.

Gayle Rosenthal on 12/11/2014

What would be the point of verbiage that a proposed Amendment would be “null and void” if not returned signed?  It’s not a good idea for 2 reasons. One, as a practical matter why would you cut short the time a seller would need to evaluate and respond ? 
Two, such language would appear to contradict the option period window. 

Again, the proper use of the Termination is the best way, in my experience to handle the execution of a proposed Amendment within the Option Period.  It just needs to be delivered at the correct moment upon the written instruction of the client.

Gayle Rosenthal on 12/11/2014

If I know my buyers would not want to go through with a contract unless a proposed amendment is executed and delivered to me before the expiration of the option period, I gets signed Termination to place in my file,  just in case. I make it clear to my buyers in an email, that I will not deliver the Termination unless instructed to by them in writing, by text or email.

Negotiating and completing an amendment within the option window is sometimes dicey, so the Termination is a good thing to have in your file.  It’s a time window that a realtor has to be very attentive to and handle properly.  It’s also critical to explain to buyers that if the Proposed Amendment isn’t signed by the seller,  they are stuck with the original terms of the original contract.

Kate McQueen on 12/11/2014

Brenda, I believe that it would be up to the buyer to decide whether or not they want to stay in the contract if the seller refuses to complete repairs as requested.  (This of course is why it’s very important to complete the repair negotiations during the 10-day option period. )

There is no process of handling a “proposed” amendment other than continuing to negotiate the terms to see if an agreement can be reached, at least not that I’m aware of.  Unless it’s executed by all parties it has no validity, and according to your own best practices of document retention, you could place it in file for reference in the event an issue arises once the transaction is closed, or you could shred it.

Or am I not understanding your question?  Not that I’m an authority for this forum by any means, perhaps TAR will answer.

Brenda Patton on 12/11/2014

Based on the writing of this scenario this situation has TWO active Amendments.  The First Amendment was submitted by the Buyer requesting repairs.  Seller receives the Amendment, does not execute.  Seller submits the Second Amendment (but it really isn’t Amendment # 2, just the second in sequence of submittals) stating he will complete only certain repairs and that the contract is null and void if not signed yada yada.

If Seller does not sign the Buyers’ Amendment and Buyers do not sign Sellers’ Amendment then the contract is not changed (that’s what Amendments do - they change the existing contract). 

The Buyers do have options at this point such as a) accepting the Sellers’ proposed Amendment; b) exercising their rights within the contract of accepting the property ‘as is’ per Para 7 Subparagraph D(1), or c) exercise their rights under the other except clauses in the contract.

My question is - What is the right process to address Proposed Amendments that are not executed?  In this instance the Buyers’ Proposed Amendment for repairs was not executed by the Seller.  What is the correct process for handling this ‘Active’ Proposed change to the contract?

Kate McQueen on 12/11/2014

Mike, I don’t believe that Blake’s grammar or vocabulary skill is the topic of discussion.  The unilateral termination of a contract is the topic, and a buyer can in fact unilaterally terminate a contract during the 10-day option period.  Terminating AFTER that period puts the buyer’s earnest money at risk, as the seller has the right to the funds if the buyer has terminated without valid cause.  Should a seller attempt to terminate a contract without the buyer’s agreement, the buyer would have the right to demand performance and would have recourse through legal proceedings.

By the way, I believe Blake’s use of the word verbiage is correct.

Mike McEwen on 12/11/2014

Narrative is the appropriate word.

Roland Guerra on 12/11/2014

It depends. Was the Buyer still in his option period? Remember the parties doesn’t have to amended anything if they chooses not to.  In this case I agree the seller/buyer can’t terminate.
“EXERCISE YOUR OPTION PERIOD” to avoid this.
ENJOY!

Andy P on 12/11/2014

Thanks Mike McEwen, I did look up “verbiage” because I swear I have heard MCE trainers use it as Blake did.  A secondary definition would make Blakes use of that word correct though. 

2.US the way in which something is expressed; wording or diction.
“we need to look at how the rule should be applied, based on the verbiage”

Mike McEwen on 12/11/2014

Look up the meaning of the word verbiage.

Blake Harrison on 12/11/2014

I advise my clients (buyers or sellers) to include verbiage that make a proposed Amendment “null and void” if not returned signed and executed by a specific date/time.  They often need to make other decisions before other date deadlines that will depend on whether or not an Amendment gets executed.  Otherwise, the Amendment is just hanging out there.

Mike McEwen on 12/11/2014

I hear agents all the time who say “We’re going to have to do an amendment.” as if it is something automatic.  The reality is that there has to be mutual consent; and there is no amendment until it is signed by both parties.


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