Realtor® Legal Tip – Here’s a simple “Time Clause” Addendum refresher.
May 21, 2019
Author: Curtis Bullock
Hypothetical: Suppose the Buyer makes an offer subject to the sale of her current home. The Seller counters with the Option to Keep House on Market Time Clause addendum. The Buyer accepts. A couple weeks go by and the Seller receives a back-up offer from another buyer. The Seller notifies the first Buyer that a back-up offer has been accepted.
What are the first Buyer’s rights and obligations at this point?
Answer: In this situation, the Buyer has two choices and will have to make a decision. The Buyer can either: (1) agree in writing to remove the agreed upon contract contingencies according to section 1.2 of the Time Clause addendum, or (2) decide not to remove the contingencies and allow the REPC to automatically become canceled.
One thing to note is that if the Buyer selects option 1 above, the Buyer is taking a risk. If he does not close the transaction (even without selling his current home), he would likely be in breach of contract. Then, if the F&A and Due Diligence Conditions were also removed from the REPC as part of section 1.2 of Time Clause Addendum, the Buyer takes on even more risk by choosing to move forward by not having the benefit of those contingencies. Buyers in this situation will need to talk this through with their agent to determine what the best decision is for them.
*Note – the UAR recently released a Seller Notice to Buyer of Accepted Offer form so be sure to check that out and understand when to use it.