A seller accepts an offer conditional on the sale of the buyer's existing home within 60 days, with a 72-hour clause. Three weeks later, the seller receives a better offer. What rights does the seller have under the 72-hour clause?

Q: What is the correct answer to: A seller accepts an offer conditional on the sale of the buyer's existing home within 60 days, with a 72-hour clause. Three weeks later, the seller receives a better offer. What rights does the seller have under the 72-hour clause?

The correct answer is Must give the first buyer 72 hours to waive their condition or the agreement becomes void. Option B correctly describes the 72-hour clause mechanism under Canadian real estate law. When a seller receives a competing offer, they can serve notice to the conditional buyer requiring them to waive their condition within 72 hours or the agreement becomes void. This process is mandated by provincial real estate legislation and standard form agreements. The seller cannot simply void the agreement unilaterally but must follow the proper notice procedure, giving the original buyer the opportunity to remove their condition and proceed with a firm sale. This balanced approach protects both parties' rights while allowing market dynamics to function effectively.

Q: What background knowledge is needed for this Contracts & Agreements question?

The 72-hour clause is a standard provision in Canadian real estate purchase agreements that allows sellers to continue marketing their property even after accepting a conditional offer. This clause is governed by provincial real estate legislation including TRESA in Ontario, RESA in Alberta, and similar acts in other provinces. The clause requires specific notice procedures and timing requirements. When triggered, the seller must provide written notice to the conditional buyer, who then has exactly 72 hours to either waive their condition(s) or allow the agreement to become void. This mechanism prevents sellers from being indefinitely bound by uncertain conditional offers while maintaining fairness for buyers who have legitimate conditions to fulfill.

Q: What is a good way to remember the answer to this Contracts & Agreements question?

Think of the 72-hour clause like a 'relationship ultimatum' - when someone better comes along, you give your current partner 72 hours to 'commit or quit.' The seller is saying 'I found someone else interested, so you have 72 hours to remove your conditions and commit fully, or I'm moving on.' When you see questions about competing offers and conditional sales, remember the 'ultimatum' concept. The seller can't just dump the first buyer immediately, but they can force a decision within 72 hours when competition arises.

Q: What exam tip applies to this Contracts & Agreements question?

Look for key phrases like 'conditional offer,' 'competing offer,' and '72-hour clause.' Remember the seller must give notice and wait 72 hours - they cannot immediately void or accept new offers without following proper procedures.

Q: How does this Contracts & Agreements concept apply in real world practice?

A seller accepts an offer conditional on financing approval with a 72-hour clause. Two weeks later, they receive a firm cash offer $20,000 higher. The seller's agent serves written notice to the first buyer at 2 PM on Monday, stating they have until 2 PM on Thursday to waive their financing condition or the agreement becomes void. The buyer must decide whether to proceed without confirmed financing or lose the property. This scenario commonly occurs in competitive markets where sellers want flexibility while buyers need time for due diligence.

Question

Contracts & AgreementsConditional OffersONHARD

A seller accepts an offer conditional on the sale of the buyer's existing home within 60 days, with a 72-hour clause. Three weeks later, the seller receives a better offer. What rights does the seller have under the 72-hour clause?

Answer Options

A

Can immediately accept the new offer and void the first agreement

B

Must give the first buyer 72 hours to waive their condition or the agreement becomes void

C

Must wait for the 60-day period to expire before considering new offers

D

Can negotiate with both buyers simultaneously