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How to use or fill out termination of contract and release of earnest money

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Click ‘Get Form’ to open it in the editor.
Begin by filling in the Seller and Buyer details, including their names and mailing addresses. This information is crucial for identifying the parties involved.
In the Contract section, specify the property being sold and include the Effective Date of the original contract. This establishes context for the termination.
Clearly state your intent to terminate the contract in the Intent section. Acknowledge that you have not agreed on how to disburse the earnest money deposit.
Review and confirm that both parties agree to terminate all obligations under the contract, except those related to the earnest money deposit as outlined in paragraph 5.
Complete the Release from Liability section, ensuring both parties understand they are releasing each other from claims related to the contract, except concerning the deposit.
Finally, sign and date where indicated. The termination becomes effective upon signing by both parties.

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What is the difference between termination and release?

Termination may end the contract, but it does not release the parties from liability (i.e. they still may sue each other). On the other hand, a release not only terminates the contract, but releases each party from any and all liability.

Do I lose earnest money if I back out?

Due diligence money is non-refundable, whereas earnest money can be refunded. If youre buying it ``as-is it doesnt make sense to offer $50k in due diligence money, as youre not going to sway the seller with inspections that may otherwise favor your buying process.

Can I get my earnest money back if I change my mind?

You would get your earnest money back if the agreement is terminated based on any clause included in the contract. Could be inspection, could be appraisal, could be you dont secure financing. Whatever contingencies are written into the contract allow you to recoup your earnest money- its not just on the sellers end.

What happens to earnest money if a contract is cancelled?

After both parties mutually cancel the agreement, escrow is instructed to refund the earnest money deposit to the buyers. If the seller refuses to release the money from escrow, the parties should lawyer up as soon as possible.

Do you get earnest money back if you change your mind?

Earnest money is returned to the buyer at closing. The buyer can choose whether to apply the funds toward a down payment, closing costs or other settlement costs. But in some cases, if certain provisions of the purchase contract are broken, the buyer will have to forfeit the earnest money and the seller will keep it.

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