What Is a "Notice to Perform" and When Can It Be Used?

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By Jamie Ayers Updated March 7, 2023


Real estate contracts are full of contingencies to protect both buyer and seller. What happens if your buyer doesn’t like those contingencies as they should? As with everything else, there is a proper process to canceling a contract. Read on to learn about the Notice to Perform.

What Is a

There are many unknowns for both buyer and seller in a real estate transaction. The buyer doesn’t yet have final approval on financing. The seller may not yet have prepared disclosures. The buyer may be waiting for their current home to sell to have the money available for this transaction.

With so many unknowns, it’s scary for both the buyer and seller to enter into the contract. What if the inspection turns up a big problem? What if the buyer drags their heels too long — holding up the sale?

For this reason, there are contingencies in real estate contracts. A Notice to Perform is the first step to take when the other party isn’t holding up their end of the bargain. Let’s dig a little deeper.

What Is a Notice to Perform?

Before you can understand what a Notice to Perform is, you need to understand contingencies. Anything that is up in the air can be a contingency.

For example, the buyer promises to buy a home for a certain price contingent upon an appraisal that confirms that price. Or the seller may promise to sell the home to the buyer contingent upon the fact that they are actively working to secure financing.

If either the seller or the buyer don't comply with the contingencies that they are supposed to, the other party can back out of the deal with no repercussions.

However, this process is not automatic. Just because the buyer didn't secure financing or sell their current home within a specified amount of time, the deal is not off.

If you think the buyer is taking too long and want to back out of the deal and look for a more serious buyer, the first step is to send a written Notice to Perform. This is basically a document reminding the buyer of their obligation and saying "hey, if you don’t fulfill this contingency in X amount of time, I’m calling off the deal."

Don't let a Notice to Perform derail your home sale.

A Clever Partner Agent can walk you through the process.

When Would You Send a Notice to Perform?

The short answer? Anytime the buyer is not lifting the contingencies as the contract obligates them to do. For example,

  • The buyer hasn’t put down earnest money (or has put down too little)
  • The buyer hasn’t provided their pre-approval or pre-qualification paperwork for a loan
  • The buyers hasn’t shown their proof of funds for closing escrow
  • The buyer hasn’t provided documentation showing their current house is in escrow
  • The buyer doesn’t submit requested documentation by the deadline

As a seller, you don’t want to drag out the process of selling your home any more than you have to. That’s what the contingencies are for, to give you an out if the buyer is taking too long.

Benefits of a Notice to Perform

There are a couple of benefits that a Notice to Perform has for the seller. First, depending on the state, you may be legally obligated to inform the buyer that you will cancel the contract if X doesn’t happen within the required time period. Thus, if you do cancel the contract the Notice to Perform protects you from any repercussions for cancelling.

Second, it may be just the kick in the pants that the buyer needs. In many cases, the quickest route to closing for you is to stick with your current buyer. If you have to cancel, then you have to back up and wait for another offer and start the process all over again. A Notice to Perform can encourage the buyer to keep moving things along.

Keep in mind that you can send a Notice to Perform and then not cancel the contract. Thus, you can use it as motivation even if you don’t intend on cancelling.

What Can You Gain?

Sending a Notice to Perform isn’t necessary in every case, even if the buyer is slow to lift contingencies. In fact, it is quite common for buyers to miss deadlines. Usually it is due to legitimate hang ups or waiting for the lender or another party to do their part.

The Notice to Perform could lead to the deal falling apart. Or it could speed up the process. It could also even scare off your buyer.

Thus, you should carefully consider the possibilities before sending a Notice to Perform. Your real estate agent is an excellent resource for making this decision. An expert agent will have closed tons of deals and know how to read the situation. They may have even worked with the buyer’s agent previously and have a good rapport and understanding of how that agent typically works.

Still need to find an agent? Clever can help! We’ll hook you up with a knowledgeable, local selling agent who can advise you on whether you should send a Notice to Perform. They can also help you through every other complicated step of the real estate process.

The best part? Clever Partner Agents charge just 1.5% of the sale price. Since the traditional seller’s commission is 3%, you’ll be saving 1.5% — which translates to thousands of dollars.

Learn more today!

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