What is a real estate purchase cancellation agreement?
Deals fall apart for ordinary reasons: the mortgage isn't approved, the inspection turns up a cracked foundation, the appraisal comes in low. Until both sides sign something, though, the property is tied up, the deposit sits in escrow and either party could still argue the other is in breach.
This agreement identifies the purchase contract and any addenda, records the reason without anyone admitting fault, and cancels it so the seller can relist and the buyer can move on. It gives the deposit holder a joint instruction showing exactly how much goes to each side and how fees are handled, adds a mutual release once the money is paid out, keeps agents' commissions separate, and asks the buyer to hand back keys and codes.
- Best for
- Buyer and seller who both agree a signed sale won't go ahead
- Signed by
- Buyer and seller
- Deposit
- Split between buyer and seller as you set, with any fees
- Length
- 2 pages
When to use a real estate purchase cancellation agreement
- A buyer's finance falls through before the deadline
- An inspection reveals problems neither side wants to fix
- A low appraisal the parties can't bridge
- Unresolved title or boundary issues
- A friendly sale between relatives that both sides decide to drop
What you fill in
15 blanks, then the name and email of each person who signs: buyer, seller.
1 The sale
- Date of this cancellation*
- Buyer name(s)*
- Seller name(s)*
- Property address*
- Date of the purchase agreement*
- Reason for cancelling* the Buyer was unable to obtain finance within the time allowed · the Buyer was not satisfied with the results of the inspection · the property did not appraise at the purchase price · a condition of the agreement was not met in time · title or survey problems could not be resolved · the Buyer's own home did not sell in time · both parties have simply agreed not to proceed · another reason, described below
- More about the reason (optional)
2 Deposit
- Currency*
- Deposit (earnest money) held*
- Who holds the deposit*
- Amount released to the buyer*
- Amount released to the seller*
- Escrow or cancellation fees (optional)
- Other payments between the parties (optional)
3 Other terms
- Governing law*
4 Who signs
- Buyer signature and date · The buyer under the purchase agreement. If buying together, all buyers should sign.
- Seller signature and date · The seller under the purchase agreement. If owned jointly, all owners should sign.
What the real estate purchase cancellation agreement covers
- The agreement being cancelled
- Reason
- The deposit
- Mutual release
- Documents and access
- General
Using the real estate purchase cancellation agreement, step by step
1 Identify the sale
Enter the buyer, seller, property and the date of the purchase agreement.
2 Record why
Pick the reason from the list and add a note if it helps. It's for the record only.
3 Split the deposit
Enter the amount held, who holds it, how much goes to each party and how any fees are paid.
4 Sign and send to escrow
Both parties sign. Download the completed PDF and send it to the deposit holder as your joint instruction.
Tips before you send it
- Read the cancellation terms in your purchase agreement first; they may already say who gets the deposit.
- Ask the escrow or title company whether they need their own release form as well.
- Make sure the two release amounts and any fees add up exactly to the deposit held.
- Keep the signed cancellation with the original purchase agreement in your vault.
Sign it online in minutes
- Fill in the blanks. Names, dates and amounts go straight into the agreement — the preview shows exactly where.
- Name who signs. Tick “This is me” for your own part. FileIt builds the PDF with every signature, date box on the right line, and you can check or move anything before sending.
- Send it. Each signer gets a secure link and signs from any device — no account needed. The signed PDF, with an audit trail and a Certificate of Completion, is filed in your vault and emailed to everyone.
Real estate purchase cancellation agreement: frequently asked questions
Does giving a reason mean admitting fault?
No. The agreement says the reason is recorded without either party admitting a breach of the purchase agreement.
Who gets the earnest money?
Whoever you both agree. Enter the amount for the buyer and the seller, and the agreement tells the deposit holder to release it that way.
What does the mutual release cover?
Claims and obligations arising from the purchase agreement, known or unknown, once the deposit is paid out. It doesn't cover the terms of this cancellation itself, or fraud.
Will an escrow company accept an e-signed cancellation?
Many do. Some insist on their own form; you can still use this agreement to record the terms. FileIt's signed PDF includes an audit trail and Certificate of Completion.