Jerome and Cynthia accept an offer on their Detroit home that includes a sale contingency, requiring the buyers to sell their current home within 45 days. On day 30, Jerome and Cynthia receive another offer they find more attractive. They want to accept the new offer. Which of the following best describes their options under a standard Michigan 'kick-out' or 'first right of refusal' clause, if one was included in the original contract?
Correct Answer
A) Jerome and Cynthia may notify the original buyers, who then typically have 48 to 72 hours to remove the sale contingency or release the sellers from the contract
A standard kick-out clause (also called a 'right to continue marketing' or 'first right of refusal' clause) in a Michigan purchase agreement allows the seller to continue marketing the property and, upon receiving an acceptable offer, notify the original buyers. The original buyers are then given a specified period — commonly 48 to 72 hours in Michigan practice — to either remove the sale contingency (proceed without it) or release the sellers from the contract so the sellers can accept the new offer. This protects sellers from being locked into a contingent contract indefinitely.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
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