Purchase Agreement Termination Letter

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Updated July 09, 2022

A purchase agreement termination letter is a document signed by both the buyer and seller upon the cancellation of a sales contract. The purpose of the letter is to recognize that each party of the transaction agrees to hold each other harmless for any claim that may arise from the terms stated in the purchase agreement.

In addition, the letter states where the earnest money deposit shall be returned and the amount that is to be released (using a release form). After authorization, the agent or third (3rd) party holding the escrowed funds will be obligated to return to the party stated in the letter.


How to Write

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1 – The Termination Form Featured In The Image Should Be Downloaded

Locate the preview picture on this page. You may view it by selecting it with your mouse. When you are ready to continue, select the PDF, Word, or ODT buttons near the image to gain access to one of these file versions of the previewed form. If you lack the software to edit any of these formats, you may still print the PDF using an up-to-date browser.

2 – Supply A Description Of The Parties And Terminated Agreement

The introduction will state some basic facts regarding the termination of the sales contract. Naturally, if this statement is to be applicable to the current situation you will need to produce some basic facts. Begin by documenting the full name of the Buyer on the first blank space. This name should appear exactly as it does in the concerned sales contract. Also, record the full name of the Seller on the second blank space precisely as it is listed in the sales contract being terminated. One common way to identify an agreement (other than citing its title) is to name its Effective Date. Locate this date on the sales contract being discussed then report it using the two empty spaces on the last two blank lines in this paragraph.

3 – Document The Dollar Amount Each Party Receives From The Termination

Oftentimes, various entities will expect money when a sales contract is terminated (especially when concerning real property). Regardless of the party or why money must be dispensed (i.e. deposits, escrows, etc.), a report must be included in this paperwork documenting each party that must receive money as a direct result of the contract’s cancellation. Locate the paragraph beginning with the bold word “Furthermore.” Directly below this paragraph are two columns of blank lines. Enter each amount that should be paid out on the blank line with the dollar sign. Next, record the full name of each entity receiving the reported dollar amount on the adjacent line in the next column (after the word “To”).

4 – Several Signature Parties Are Needed For This Execution

The Buyer, Seller, and Agent named in the sales contract this document refers to must each supply a dated signature. There will be enough room for two Buyers, two Seller, and two Agents to supply such items however, if there are more entities in any of these parties, you may add additional signature lines. The Buyer will be the first entity to sign this document. Each one will have to sign the “Buyer’s Signature” line, then enter the current date on the adjacent line. 

Next, every Seller involved with the original sales contract should sign his or her name on a unique “Seller’s Signature” line then, immediately upon signing, fill in the current date on the blank line labeled “Date.”

Finally, every Agent who participated in the sales contract must sign his or her name. Two individual lines (each labeled “Agent’s Signature”) have been provided so that up to two Agents can sign their names. The date each one provided his or her signature should also be supplied to the “Date” line by the signature party at the time of signing.