The Texas REALTORS® used to have a form that terminated the contract as well as provided for the release of earnest money, but now all I can find is a form entitled Release of Earnest Money (TAR 1904). My seller wants to be sure that the contract has been terminated, and that the earnest money is released back to the buyer, who could not obtain financing. What form should we use?

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  • The Texas REALTORS® used to have a form that terminated the contract as well as provided for the release of earnest money, but now all I can find is a form entitled Release of Earnest Money (TAR 1904). My seller wants to be sure that the contract has been terminated, and that the earnest money is released back to the buyer, who could not obtain financing. What form should we use?

TAR form 1904 used to be entitled Termination of Contract and Release of Earnest Money. The title of the form was changed for several reasons, but primarily to avoid confusion between this form and other forms that are actually notice forms executed by a buyer to notify the seller of the buyer’s termination of the contract under a right contained in the contract. (Examples include the notice of termination under paragraph 23 or the third-party financing condition addendum of the TREC contracts or a notice of similar contractual termination rights that a buyer has under the TAR commercial contracts.) Notwithstanding the change of the form’s title, the Release of Earnest Money form does contain language whereby the buyer and the seller release each other from all liability under the contract referenced in the form. This language has the legal effect of terminating all of the rights the parties have under the contract and thus terminates the contract itself. In your example, if both the buyer and the seller sign the form as written, then the seller can consider that the contract has been formally terminated.

Source: TAR

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