Stacey 09 Apr 2021

The basic structure of a Real Estate Purchase Agreement covers the financial terms of the transaction, the mechanics of the transaction, and the time frames sellers and the buyers have to provide each other with information required by the Purchase Agreement, review the information, and approve it.  These time frames are often designated dates set as benchmarks to keep the process moving along as planned. A seller can issue a notice if a deadline passes, and the buyer haven’t taken the agreed-upon actions. This notice is called a notice to perform. 

What is a Notice to Perform?

A notice to perform is a real estate tool designed to make buyers stick to agreed-upon deadlines that are defined in the real estate purchase agreement. Timeframes vary by state, but in the California residential purchase agreement, issuing a notice typically gives the buyer 48 hours to remedy the situation at hand. After this timeframe, if the buyer has still failed to comply with the agreed-upon action, the seller can deliver escrow cancellation instructions and even keep the earnest money deposit in some cases.

This time frame can also be enforced by the buyer. A notice to perform can force the issue of whether or not all contingencies have been satisfied. The buyers’ approval of the required information and the condition of the home are conditions of their obligation to purchase it, aka., contingencies. If the inspection discloses problems, the buyers may request the sellers to perform repairs, but the sellers are not obligated to do so. If they refuse, the buyers can either proceed or terminate the contract. If the seller does agree to make the changes, but seller fails to deliver something by its due date, the buyer may use the Notice to Perform to demand that the seller deliver it “within a reasonable time,” typically 48 hours. 

“Notice to Perform”- Uses

The notice to perform offers various functions for both the buyer and the seller, which means that depending on your perspective, the notice to perform can work for or against you. 

From the perspective of a seller who wants to get out of a contract, or has changed their mind entirely about selling, the Notice to Perform has the distinct advantage of not violating the seller’s listing agreement, which almost always provides the full commission is due if the seller voluntarily takes the home off the market while it is in effect. In another scenario, the seller might find themselves indefinitely negotiating with the buyer and may use receiving a notice to perform as a tool to remove themselves from that specific agreement in order to sell to someone else, by simply not meeting the deadline and thus canceling the agreement. 

From a buyer’s perspective, the notice to perform can put pressure on a seller to address the inspector’s findings expeditiously. Alternatively, if the buyer changes their mind and would like to continue looking at other homes instead, they could try to issue a notice to perform that the seller would be unable to meet as a way to get out of the deal. Thus, we learn that buyers have no obligation to buy until they notify sellers that all contingencies are satisfied and being aware of the notice to perform and how to use it, can be advantageous to both buyers and sellers. Of course, this notice is not a tool to be used without discretion; to avoid souring an otherwise good deal, one might save issuing a Notice to Perform for a last resort. If you are a real estate agent or a seller looking to learn more about the tools available throughout the process, or simply looking for a dedicated, trustworthy team, contact Anchor Seaport Escrow now. Independently owned and operated, Anchor Seaport Escrow has been serving the real estate community of Long Beach/ Southern California, working with buyers, sellers, and realtors with all their escrow needs, for over 40 dedicated years. Contact us here now to learn more about our services.

Summary
A Notice to Perform Can Work for or Against You
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A Notice to Perform Can Work for or Against You
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A notice to perform is a key part of any real estate agreement decided on by both parties and made through an agent. Read our comprehensive guide to understanding NOP's.
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Anchor Seaport Escrow
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