James, an Employing Broker in Fort Collins, is representing a seller. A buyer submits an offer using the CREC Contract to Buy and Sell Real Estate. Before the seller signs, James receives a second, higher offer. James presents both offers to the seller simultaneously. The seller wishes to accept the higher offer but also wants to keep the first offer as a backup. Which CREC-approved form should James use to accomplish this?
Correct Answer
A) The CREC Back-Up Contract Addendum attached to the second offer
The CREC has approved a Back-Up Contract Addendum specifically for situations where a seller accepts one offer as primary and wishes to hold a second offer as a backup contract. The seller accepts the higher (primary) offer outright and uses the Back-Up Contract Addendum with the second offer, which becomes effective only if the primary contract fails. This is the correct CREC-approved procedure for handling multiple offers with a backup position.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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