Is an email from a buyer’s agent “terminating” a contract effective?

QUESTION: I have several questions. I am a listing agent and my client signed a contract several weeks ago. I just received an email from the buyer’s agent stating that his client was  terminating that contract. The email was received before the expiration of the due diligence period. Is an email from a buyer’s agent, which is not actually signed by the buyer, sufficient to terminate a contract? Aren’t buyers required to use a termination form provided by NC REALTORS®, as opposed to an email, to terminate a pending contract?

ANSWER: For the reasons discussed below, the answer to your first question is not necessarily. And because of that uncertainty, we strongly encourage agents to instead use one of  the standard termination forms provided by NC REALTORS®. Those forms are by far the best method for a party to terminate a pending contract. However, no particular form of  termination notice is legally required.

The buyer’s right to terminate a contract during the due diligence period is set forth in paragraph 4(g) of Form 2-T. That paragraph states that the buyer has the right to terminate the  contract during the due diligence period and can do so by “delivering to Seller written notice of termination.” While paragraph 4(g) requires the termination notice to be in writing, it does  not require the use of a particular form of written notice. Nevertheless, buyers seeking to terminate a contract during the due diligence period should be advised to sign Standard Form  350-T. Standard Form 390-T should not be used in that circumstance. A Q & A on that subject can be found here.

In your case, the fact that the email you received came from the buyer’s agent and not the buyer raises serious questions about whether the termination notice was actually authorized  by the buyer. Just as real estate agents don’t ordinarily have the authority to sign contracts on behalf of their clients, agents don’t ordinarily have the authority to terminate those contracts. If you receive an email from a buyer’s agent that purports to terminate a contract, you should insist that the agent provide evidence that the buyer has authorized the agent to send that email. For buyer agents, one way to accomplish that would be to have the buyer send you an email that can be forwarded to the listing agent clearly stating that the buyer is terminating the contract.

As for how a written notice of termination may be delivered, paragraph 20 of Form 2-T (entitled “CONDUCT OF TRANSACTION”) states that any action between the parties may be  conducted by electronic means. Paragraph 20 goes on to state that any written notice may be transmitted to any email address set forth in the Notice Information section of the contract and that any notice required to be given to a party may be given to that party’s agent. If an agent’s email address is provided in the Notice Information section of a contract, delivery of a written notice of termination to the agent’s email address would be legally sufficient and effective.