A buyer and seller have a ratified purchase agreement in Virginia. The contract includes a home sale contingency, allowing the buyer to cancel if the buyer's current home does not sell within 30 days. On day 25, the seller receives another offer and invokes a kick-out clause included in the purchase agreement. The seller gives the buyer 72 hours to remove the home sale contingency. The buyer cannot remove the contingency and does not respond within 72 hours. What is the MOST likely outcome under the terms of a standard Virginia purchase agreement with these provisions?
Correct Answer
A) The original contract is terminated, the buyer's earnest money is returned, and the seller may accept the new offer
A kick-out clause (also called a release clause or first right of refusal clause) in a Virginia purchase agreement allows the seller to continue marketing the property and, upon receiving a bona fide offer, to give the buyer a specified time (here, 72 hours) to remove the contingency and proceed. If the buyer cannot remove the contingency within the notice period, the original contract is terminated per its terms, the buyer's earnest money is returned (since the buyer did not default—the contingency was not met), and the seller is free to accept the new offer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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