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Q.If I'm buying or selling a business, when can the escrow be cancelled?
A.Just like when you buy or sell a home, when you buy or sell a business, there should be a purchase and sale agreement and escrow instructions. Both the purchase and sale agreement and the escrow instructions are binding contracts.
An escrow generally can be terminated only if: (1) one of the parties fails to comply with a pre-condition, or material condition within the specified time, or (2) both parties agree.
Needless to say, it is easier to cancel escrow if both parties agree and then inform the escrow officer in writing. If the parties cannot both agree to cancel escrow, you may need to retain the services of an attorney. Oftentimes, if you feel you have grounds to cancel a letter on legal letterhead is all the other party needs to see to comply.
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