Sandra is selling her Memphis home and has accepted an offer from David that includes a home sale contingency. The contingency states that David's purchase is conditioned upon the sale of his existing home within 45 days. After 30 days, Sandra receives a better offer from another buyer. What option is typically available to Sandra under a standard Tennessee 'kick-out' clause?
Correct Answer
A) Sandra may notify David that he must waive the home sale contingency or release the contract within a specified period, typically 48 to 72 hours
A 'kick-out' clause (also called a 'right of first refusal' or 'bump' clause) in a Tennessee contract allows the seller to continue marketing the property. If the seller receives another acceptable offer, the seller may notify the contingent buyer (David) that he must remove the home sale contingency and proceed with the purchase—typically within 48 to 72 hours—or release the contract. This is a standard Tennessee real estate practice and protects the seller while giving the contingent buyer a final opportunity to perform.
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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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