A North Dakota purchase agreement for a property in Cass County includes a clause stating: 'This sale is contingent upon the buyer's current home at 123 Main Street, Fargo, ND selling and closing within 60 days.' After 45 days, the buyer's home has not sold. The seller receives a second offer from another buyer and wants to accept it. The seller's agent sends the original buyer written notice of the new offer and gives the original buyer 72 hours to waive the home-sale contingency or the contract will terminate. Which statement best describes this situation under North Dakota contract law?

Correct Answer

D) The seller may use a kick-out clause to give the original buyer the option to waive the contingency, and if the buyer fails to waive, the seller may terminate and accept the second offer

The scenario describes a 'kick-out clause' (also called a release clause or first right of refusal clause), which is a common provision in North Dakota purchase agreements with home-sale contingencies. A kick-out clause allows the seller to continue marketing the property and, upon receiving a bona fide second offer, to notify the original buyer and give them a specified period (here, 72 hours) to waive the contingency and proceed. If the original buyer fails to waive the contingency within the notice period, the seller may terminate the original contract and accept the new offer. This is a recognized and enforceable contractual mechanism under North Dakota contract law.