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FORMS GUY A discussion on the buyer’s right to terminate a contract if the condition of the property changes BY WILL MARTIN | GENERAL COUNSEL
Dear Forms Guy, I’m confused about a change that was made this past July to the third checkbox in Form 350-T (“Notice to Seller That Buyer Is Exercising Their Unilateral Right To Terminate the Offer to Purchase and Contract (Form 2-T)). Can you help me?
Sincerely,
Ray
Forms Guy: I’ll do my best, Ray. What’s troubling you? Ray: Thanks, Forms Guy. In the old version of Form 350-T, the third checkbox gave the buyer the right to terminate the contract as a result of a fire or other casualty loss under paragraph 12 of the old version of the Offer to Purchase and Contract (Form 2-T). In the new version of Form 350-T, the third checkbox now gives the buyer the right to terminate the contract if the property “is not in substantially the same or better condition at Closing as on the date of
this offer, reasonable wear and tear excepted.” Why was the wording in this checkbox changed? It seems that the new wording gives buyers an easy way to terminate a contract if they want out! Forms Guy: Before I answer your question, I need to give you a little background. Before July 1, 2019, the contract had two different paragraphs that addressed the effect of something happening to a property during the time after an offer was made, but
before it closed. Paragraph 12 (“Risk of Loss”) addressed the effects of a fire or other casualty taking place (for example, a hail storm that damages the roof and/or siding), while paragraph 11 (“Condition of Property at Closing”) addressed other things that might happen, such as the failure of a system (for example, an HVAC system that was in good working order on the date of an offer, but breaks down just before settlement). There was confusion from time to time about whether a particular situation was covered under paragraph 11 or ncrealtors.org • INSIGHT 11
