By many accounts, buyers and sellers of residential real estate back out of purchase agreements more easily than they used to – parties care less these days for the sanctity of a purchase agreement. Most real estate professionals currently practicing have run across at least a deal or two where a party cannot or does not consummate the transaction. Reasons number high for this decreased regard, but are sure to include circumstances beyond the parties’ control or planning.

Anyone in the real estate industry knows that market conditions have changed in recent years. Whether due to adjusted property values, lending standards, new construction activity, or simple supply and demand, statistics continue to show that the housing market remains slow compared to the early half of the decade. Increasingly in this type of market, conditions fail in attempted purchases.

Failed conditions kill a real property sale. If the parties cannot save the deal, the purchase agreement typically must be cancelled. If the parties cannot voluntarily cancel the purchase agreement together, then circumstances may require one party to commence a proceeding under one of Minnesota’s Residential Purchase Agreement Cancellation Statutes.

Minnesota permits three different statutory cancellation proceedings. Minn. §559.21 offers a 30-day cancellation procedure, only available to sellers. Both sellers and buyers can seek cancellation using the two procedures available under Minn. §559.217, the 15-day Declaratory Cancellation and Cancellation with 15-day right to cure. Parties most commonly commence cancellation proceedings to authorize the release of earnest money, determine who gets the earnest money, and determine that the purchase agreement no longer binds the parties. This final determination frees the parties to move on to another transaction.

Not all situations call for statutory cancellation proceedings. Certain situations may not merit a statutory cancellation proceeding, and in other situations, the circumstances may permit other or additional legal remedies. Any party considering a statutory cancellation proceeding should consult a legal professional as to whether one of these proceedings is advisable for the party’s particular circumstances.