BIC Tip #1094 — The Difference Between Form 350 and Form 390
When a buyer decides not to move forward with a real-estate purchase in North Carolina, there are two commonly confused forms: Form 350 (Notice to Buyer That Seller Is Exercising Right to Terminate) and Form 390 (Termination of Contract by Mutual Agreement).
Understanding which form to use—and when—is crucial to ensure the termination is legal, clear, and properly documented.
Form 350 Notice of Termination (One-Party Action):
Form 350 is used when one party—usually the buyer has the contractual right to terminate under a specific paragraph of the Offer to Purchase and Contract (Form 2-T).
It is not a mutual release. It is a unilateral notice that one side is ending the agreement under an allowed condition. For example, if the buyer terminates during the due diligence period for any reason (Paragraph 4(a)).
Key Points:
- It does not require the other party’s signature to be effective.
- It should cite the paragraph or reason that allows termination.
Once properly delivered, the contract is over, and the termination is effective immediately.
📝 Form 390 Termination of Contract by Mutual Agreement:
Form 390 is used when both parties agree to terminate the contract and formally release one another from any further obligations.
It is not based on a right under the contract—it is a mutual decision to walk away. For example the buyer and seller agree to cancel after an inspection reveals major issues or both sides decide to stop before closing because of title complications, or personal circumstances.
🔹 Key Points
- It requires signatures from both parties to be valid.
- It serves as the official release document for trust funds (earnest money)
- It confirms that both sides agree the contract is terminated and neither will pursue further claims.
Using the correct form ensures clarity, protects both parties, and keeps your transaction compliant under North Carolina Real Estate Commission standards.
