James is selling his home in Framingham, Massachusetts. The buyer's purchase and sale agreement includes a home sale contingency, allowing the buyer to cancel if the buyer's current home does not sell by a specified date. James receives a second offer and wants to accept it. The purchase and sale agreement contains a 'kick-out clause.' Under Massachusetts practice, what does a kick-out clause allow James to do?
Correct Answer
B) Notify the first buyer that a second offer has been received and give the first buyer a specified period to remove the home sale contingency or the contract will be terminated
A kick-out clause (also called a release clause) in a Massachusetts purchase and sale agreement allows the seller to continue marketing the property while the buyer's home sale contingency is in effect. If the seller receives another acceptable offer, the kick-out clause requires the seller to notify the first buyer, who then has a specified period (often 24 to 72 hours) to either remove the home sale contingency and proceed with the purchase or allow the contract to be terminated so the seller can accept the second offer.
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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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