What is a 'kick-out clause' in an Arizona real estate contract?
Correct Answer
A) A clause permitting the seller to accept a backup offer and give the original buyer a specified time to remove contingencies or release the contract
Correct: A - A clause permitting the seller to accept a backup offer and give the original buyer a specified time to remove contingencies or release the contract. A kick-out clause permits the seller to accept a backup offer and gives the original buyer a specified time (typically 72 hours) to remove contingencies or release the contract. This protects sellers when accepting offers with contingencies by allowing them to continue marketing. Why not B: This option is incorrect because "A provision automatically canceling the contract if inspections reveal major defects" does not match the rule tested by the question. The correct answer is "A clause permitting the seller to accept a backup offer and give the original buyer a specified time to remove contingencies or release the contract". A kick-out clause permits the seller to accept a backup offer and gives the original buyer a specified time (typically 72 hours) to remove contingencies or release the contract. This protects sellers when accepting offers with contingencies by allowing them to continue marketing. Why not C: This option is incorrect because "A provision allowing the buyer to cancel within 72 hours for any reason" does not match the rule tested by the question. The correct answer is "A clause permitting the seller to accept a backup offer and give the original buyer a specified time to remove contingencies or release the contract". A kick-out clause permits the seller to accept a backup offer and gives the original buyer a specified time (typically 72 hours) to remove contingencies or release the contract. This protects sellers when accepting offers with contingencies by allowing them to continue marketing. Why not D: This option is incorrect because "A requirement that the buyer must increase their offer if competing bids are received" does not match the rule tested by the question. The correct answer is "A clause permitting the seller to accept a backup offer and give the original buyer a specified time to remove contingencies or release the contract". A kick-out clause permits the seller to accept a backup offer and gives the original buyer a specified time (typically 72 hours) to remove contingencies or release the contract. This protects sellers when accepting offers with contingencies by allowing them to continue marketing.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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