26-22 Current Legal Forms with Tax Analysis FORM 22.20
FORM 22.20 Release agreement terminating existing real estate contract
COMMENTThe parties to an agreement often include one or more contingencies in the contract. For example, an agreement for the sale of real property will typically be made contingent upon the buyer obtaining a mortgage loan with an interest rate and other terms acceptable to buyer, and a commercial lease may be made contingent upon the tenant securing a favorable contract with a private trash hauler.
If contingencies cannot be fulfilled within a particular time period, the purchaser or tenant will have the right to terminate the agreement and walk away from the deal. Upon the failure of a contingency, the parties will often negotiate a modification agreement, in effect "resurrecting" the original transaction with certain changes in the terms. (See the preceding form, No. 22.19, for a sample modification agreement.)
However, the nature of certain contingencies is such that if the contingency fails, the purchaser or tenant will probably have no interest in negotiating a modification agreement. Examples include: (1) where the transaction is contingent upon the purchaser or tenant obtaining certain necessary governmental approvals, and such approvals are not granted; and (2) where the transaction is contingent upon the results of an environmental site assessment, which ultimately reveals the existence of a severe environmental problem on the premises.
The form that follows is intended for use under such circumstances in order to terminate the existing real estate sale agreement. It also contains a confidentiality provision requiring the erstwhile purchaser or tenant to remain silent about its reason for terminating the deal. Such a clause is designed to protect the seller or lessor from the ill effects of adverse publicity. The seller or lessor will be hard pressed to find a new buyer or tenant for the property if word spreads throughout the community about the reason why the deal failed.
FORM
RELEASE made this day of ______[date] , between ______[______insert name of seller ], residing at ______[address] ("Seller"), and THE CORPORATION, a corporation existing under the laws of the State of ______[state] , with offices for the transaction of business at ______[address] ("Purchaser").
WHEREAS, the parties hereto entered into an earlier agreement dated ______[insert date of original contract], for the purchase and sale of property commonly known as ______[insert street address or other description of the property's location, including city, state and zip code] and more particularly described in said agreement; and
WHEREAS, said agreement contained a contingency in Paragraph No. ______for ______[e.g., an environmental site assessment ("ESA") to be performed by Worldwide Scientific Company (Worldwide)]; and
WHEREAS, ______[e.g., the ESA was timely performed by Worldwide, but Worldwide was unable to render an opinion that there did not exist any evidence of an adverse environmental impact]; and
WHEREAS, Purchaser gave timely notice of the failure of the contingency, pursuant to Paragraph No. ______; and
WHEREAS, the parties wish to release each other and clarify their rights and obligations;
It is, therefore, agreed as follows:
1. Release. The parties, for themselves, their heirs, successors and assigns, hereby release each other from any further obligation under said agreement dated ______[date] .
2. Parties have no more rights under original contract. Each party acknowledges that it has no further rights under the said agreement dated ______[date] .
3. Return of deposit. Upon execution of this release, the Purchaser's deposit of ______Dollars ($______) shall be delivered to Purchaser by the real estate broker, namely, Realty, Inc.
4. Confidentiality clause. Purchaser agrees for itself, its successors, heirs and assigns to refrain from disclosing to any individual, partnership, corporation or other entity any information ______[e.g., that is contained in the Worldwide report or any information learned as a result of the inspections made by Worldwide]. Purchaser acknowledges that release of such information could have a serious impact on the value of Seller's property and upon Seller's ability to conduct business. Seller shall be entitled to injunctive relief and monetary damages in the event that Purchaser violates the provisions of this Paragraph 4.
5. Seller to make best efforts to remedy problem plaguing property. Seller represents that he/she will make his/her best efforts to learn more about the problem with the property and take steps to remediate the problem, if possible. However, Seller is not committed to take any particular course of action. Failure of Seller to take action does not relieve Purchaser of the confidentiality requirements under Paragraph 4 hereof.
[Add, if appropriate:]
6. Purchaser has returned copy of environmental site assessment. Purchaser represents that it has returned its copy of the ESA report to Seller. Purchaser further represents that it has not made any photocopies or disseminated any copies or information to any third party.
The parties hereto have set their hands the day and year first above written.
______
Seller
THE CORPORATION
Purchaser
By: ______
President