Kick Out Clause
A kick out clause allows a seller to continue marketing their property and accept backup offers even after signing a purchase agreement with contingencies. If the seller receives a better offer, they can "kick out" the original buyer by giving them a specified time period to remove their contingencies or lose the contract. This clause protects sellers from being tied up indefinitely by buyers with lengthy contingency periods.
Example
“The seller accepted Bob's contingent offer but included a kick-out clause, giving him 48 hours to remove his home sale contingency if another buyer made a non-contingent offer.”
Memory Tip
A kick-out clause lets sellers 'kick out' buyers with contingencies when better offers arrive - like kicking someone out of line.
Why It Matters
Sellers use kick out clauses to maintain negotiating power while buyers work through contingencies, potentially securing better terms or faster closings. Buyers must understand they could lose the property if they can't quickly satisfy their contingencies when activated.
Common Misconception
Buyers often think a signed purchase agreement guarantees they'll get the property, not realizing a kick out clause gives sellers the right to accept competing offers.
In Practice
A seller accepts an offer contingent on the buyer selling their current home but includes a 72-hour kick out clause. When another buyer makes a non-contingent offer, the seller activates the clause, giving the first buyer 72 hours to waive their contingency or lose the deal.
Etymology
The term uses 'kick out' in the sense of ejecting or removing, as the clause allows sellers to 'kick out' a contingent buyer if a better offer comes along.
Common Misspellings
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