Buyer does not want to remove the contingencies and wants to back out. Does the cancellation need to be signed within the time specified in the Notice? If not, what happens to the earnest money? The Notice was sent when the date for removal of contingency had not expired. The Notice gave until the morning, and the accepted offer gave until the end of the day.
You need to ask your real estate agent who's representing you on this deal and who's familiar with the documents you're referring to.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
The exact answer will depend upon the real estate purchase agreement signed by buyer and seller. Normally, a cancellation like this, will not be considered valid until it is received. You should consult with a real estate attorney, who can review the contract, in order to get an exact response.