Revocation comes from the verb "to revoke", which means to take back the validity of something. The definition of revocation is detrimental to contract law. It gives the person making the offer the right to take back the offer at any time before the other party has accepted the offer. In case the buyer, the one making the offer, allows the seller a prolonged period of time to decide upon the offer, the seller must be aware of the meaning of revocation. At any given time, the buyer, the offerer, can take the offer off the table.
Revocation in real estate is only blocked by the acceptance of the offer and, very important, the communication of the acceptance. If the seller communicates the acceptance of the offer or offers a counter-offer, then the revocation can not go into effect, and a binding agreement stands between the two parties. This agreement can only be affected by the conditions that already exist in the offer.
A real estate agent or REALTOR® has two fundamental obligations to their clients besides the trust shared between a real estate agent and their client: to obey the client’s lawful instructions and the duty of care. These two principles of a real estate professional’s life affect the revocation of an offer or a counter-offer. When the buyer informs the real estate agent that they want to withdraw their offer, the real estate agent must follow the instruction at once.
In real estate, revocation is a term applied in a few different situations:
The buyer, Sam, wants to revoke the offer made to purchase the property. Sam informs the real estate agent of his decision to withdraw the offer, and they prepare a letter that stipulates the proposal and clearly states the revocation. Sam signs and dates the letter with witnesses. The real estate agent then gets in touch with the other party’s real estate agent to communicate the need to deliver a revocation. Once given the revocation, it goes into effect.
If the seller’s real estate agent receives Sam’s revocation after the seller accepted the offer, then the revocation becomes a breach of contract. The party that was hurt, in this case, the seller, can keep the deposit and also sue the buyer for additional costs and damages.
Real Estate Tips:
Revocation guidelines and eligibility vary from state to state, so do not forget to contact a local real estate agent to help you understand the specifics of your real estate market!