We recently had a buyer put an offer in who needs to sell their current home before they can purchase. When they were making their offer my agent explained to them that they could likely expect a "kick-out clause" in the counter offer. They wanted to know what a kick out clause was and I thought others might want to know this too, so I thought I'd explain a little about it.
The top of the form looks like this. The buyer has to use this form as a "contingency" to the offer they are making and let the seller and their agent know the location and what actions have been taken on their part in order to sell or lease their home. When we use this form, we are very detailed and if property is listed FSBO or with a real estate firm we explain that. We also tell if it is currently under contract and when the set closing date and acknowledge if any unilateral extensions may exist to cover our purchaser.
If a purchaser has used this form and seller has accepted it, if for any reason they don't close the home they are selling they are no longer legally bound to purchase on this end and their earnest money is protected.
So what's the "kick-out"?
Well ... that it is and generally speaking no seller will allow a contingency contract without a kick-out. It is a negotiated period of time that a buyer would have to "fish or cut-bait". Sellers will continue to market their home and reveal it has a contingency contract. We actually have a status of "contingent" in our MLS. If the seller gets another offer they are willing to accept then the buyer has the option within the time frame of negotiated hours to removing the contingency or withdraw their offer.
We tell our buyers they can expect this kick-out as part of the counter, because if they have a good agent they certainly will put it in the contract. It really wouldn't be wise to stop marketing your home for a "maybe" contract and that's exactly what a contingency contract is, a maybe.
We always explain the legal document you are signing and advise you to seek legal advice if there is something you don't understand. We have an attorney we use frequently who is always available to answer questions about the GAR contract forms. As real estate professionals who are familiar with the parts we are allowed to fill it, that's what we explain.
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Tammy Lankford, Broker/Owner
Broker License # 169695 Lane Realty License # H-11420
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