A Connecticut purchase agreement contains a clause stating that the transaction is contingent upon the sale of the buyer's existing home within 45 days. The seller also includes a kick-out clause allowing the seller to continue marketing the property and accept another offer, with 72 hours' notice to the first buyer to remove the contingency or release the contract. On day 30, the seller receives a second offer and gives the first buyer 72-hour notice. The first buyer's home has not sold. Which of the following is the most accurate statement about the first buyer's options?
Correct Answer
B) The first buyer may waive the home sale contingency and proceed, or decline and have their earnest money returned
Under a properly drafted kick-out clause, when the seller provides the required notice (here, 72 hours), the first buyer must decide whether to waive the home sale contingency and proceed with the purchase using other financing, or decline to waive and allow the contract to terminate with a full return of earnest money. The kick-out clause gives the buyer a choice, not an automatic termination — the buyer can proceed if they have the means to do so without the contingency.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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.
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