What Is a Notice to Perform?
Some states such as California allow the use of a special form that allows either the seller or buyer to cancel a contract regarding the purchase of a home, condo, or townhouse anytime a particular set of conditions is met. These forms are produced by the California Association of Realtors and are often obligatory in situations when one party wants to cancel their purchase contract. In the states that make use of these forms, a breach in contractual obligations cannot be acted upon without the initial use of a “Notice to Perform” agreement initiated by either the buyer or the seller.
Different Types of Notices to Perform For Buyers and Sellers
Take the example of a seller who recently purchased a property in Santa Monica with a loan contingency. The buyer had met all of the terms for securing a loan and the seller was ready to have him remove the “loan contingency” clause from his C.A.R. purchase contract agreement. The fastest and most secure way for the seller to proceed, as recommended by top realtors in California, is to procure a “Notice to Buyer to Perform” and have the buyer remove any such contingencies.
Another example involves a West Los Angeles homebuyer who was interested in purchasing a townhouse in Brentwood. In this case, the buyer had failed to perform a contractual obligation that involved providing the proof of funds to close an escrow. Before the seller was able to sign the contract, she had to provide the buyer with a “Notice to Buyer to Perform” in order to have the purchase contract successfully terminated.
These are only a few small examples of how the form is necessary to weed out buyers who have little intention in closing the deal, or to remove non-performing buyers from a contract within a specific time period specified on the Notice form. Oftentimes, the seller may also win the earnest money deposit initially provided by the buyer, if it gets to the point that liquidated damages must be claimed even after all contingencies are released.
California also has laws that help protect buyers by releasing “Notice to Seller To Perform” forms that can help buyers cancel purchase contracts in the event that a seller fails to perform a set of actions within a specific timeframe. For example, if a seller for a condo in Pacific Palisades fails to deliver a pest inspection within a specific timeframe (as designated in a C.A.R. purchase agreement) a buyer has the option of using the Notice to cancel the purchase contract or exercise the right to delay removal of the buyer’s contingencies.
The purpose of this blog post is to introduce you the various types of Notice forms available to protect buyers and sellers in the state of California. It is not meant to replace professional, legal advice. Please consult with your lawyer for more specific information regarding the use of a Notice to Seller/Buyer to Perform.
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