Cancellation of Real Estate Purchase Agreements in Minnesota

16 Apr

In Minnesota, there are three ways to cancel a purchase agreement, when one party has failed to perform or is in breach.  The three options include voluntary cancellation, statutory cancellation, and a judicial cancellation. 


A buyer and seller can voluntarily sign a cancellation of purchase agreement.  Parties who mutually agree to cancel would often use a “Cancellation of Purchase Agreement” form, confirming that each desires to cancel, and addressing how the earnest money will be handled (i.e., refunded to buyer or retained by seller).  Such an agreement is best handled through the parties’ attorneys or REALTORS.  A cancellation of purchase agreement form must be signed by all the parties to the purchase agreement—buyer(s) and seller(s), with the same terms—in order for it to be an effective cancellation of the purchase agreement. 


In the event one of the parties refuses to sign the cancellation of purchase agreement form or is in default of the terms or conditions outlined in the purchase agreement, a statutory cancellation process is available.  There is no standardized form that exists for the statutory cancellation of a purchase agreement.  It is a legal process and should be handled by the party’s attorney.  Although it is far more streamlined than a court proceeding, it has specific notice and service requirements that must be strictly adhered to.  Minnesota Statute § 559.217,, outlines the process that must be followed in order to effectuate the cancellation of the purchase agreement. 


Due to the statute’s strict requirements it is advisable that a party wishing to cancel the purchase agreement have an attorney draft the necessary documents and commence the statutory cancellation process on the party’s behalf.  A benefit of statutory cancellation is that it is a 15-day cancellation process, so the purchase agreement may be definitively cancelled within a 15-day period from the Notice of Cancellation.  Additionally, the party who initiates a successful statutory cancellation retains the earnest money.

Finally, a Court could declare a contract cancelled.  This tends to be the least attractive and most burdensome option, and is only appropriate in select circumstances.  In most instances, either the voluntary cancellation or statutory cancellation options addressed above will best serve the parties.

This blog entry is written by Deb Newel, an Associate at Thomsen & Nybeck, P.A.  Deb practices in the litigation area of the firm with primary focus on General Civil Litigation, Real Estate Litigation, Insurance Litigation, Construction Litigation and Townhome and Condominium Law.  For more information on real estate law, please visit


One Response to “Cancellation of Real Estate Purchase Agreements in Minnesota”

  1. Angela Larson September 15, 2009 at 10:31 pm #

    I am wondering what option is most suitable (statutory or judicial) when one party cannot be reached. Is there any way to perform a statutory cancellation without personal service on the defendant?

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