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Sounds like what you may have is a home close contigency, not nearly as risky as a home sale contingency. That your attorney wants to propose removing the contingency, means the buyer is obligated to close even if they do not close on their existing home. Regardless, the buyer's mortgage commitment is likely dependent on the close, so they have an out.
The kick out clause is customary. It's also form over substance in most markets, right now. Buyers tend not to look at homes that are under contract with a kick out clause because there are too many other homes that do not have that clause and they may not want to compete with the original buyers on price and terms.
Just curious, where is your agent in all of this routine stuff?
Thanks everyone. My agent doesn't seem to think there's a problem with the contingency clause and said I should just move forward with it because it is a buyer's market after all. Asking the buyer too much may turn her away, hence my hesitation with removing the contingency. My attorney recommend that I just go ahead and try to get this clause removed. I suppose if the buyer feels real confident about the sale of her home, she shouldn't have issues with being able to close on it?
At the very least I would add something that lets me continue to show the house. Most buyers would probably not want to see a house under contract, but you never know.
I think this is a case of "different terms meaning different things in different areas". It sounds to me like everyone is not talking the same thing. To me, a "kickout" clause sounds like something a buyer would want to get the seller out if they don't move out on time. In my area, what you are wanting to do has a specific form, called a "Right to Continue to Market" form. It is required in order to list a property in MLS as "Active-Contingent Sale", and contains a "bump clause" which says that if the seller gets another offer, they can tell the first buyer to remove their contingency in x days or step aside. It is not an out for the buyer, so there is no reason a seller shouldn't want it if they can get the buyer to agree to it.
And your attorney is right, they are uncommon to use in a strongly buyer's market.
Quote:
Originally Posted by kimchee
I'm the seller. The buyer's agent drafted the contract and it has been executed and in attorney review now. The contract obviously works in the favor of the buyer so I'm trying to find ways of protecting myself in case her deal falls through. Not sure the likelihood of that happe..,
Wow, in my area, that is Practicing Law without a Law Degree, and is really really bad. Unless you mean that they used a form that an attorney (or the state board, or whoever) drafted, which is an entirely different issue.
Thanks everyone. My agent doesn't seem to think there's a problem with the contingency clause and said I should just move forward with it because it is a buyer's market after all. Asking the buyer too much may turn her away, hence my hesitation with removing the contingency. My attorney recommend that I just go ahead and try to get this clause removed. I suppose if the buyer feels real confident about the sale of her home, she shouldn't have issues with being able to close on it?
If I were your agent I would do the due dilligence to determine the likelihood of closing on their current home. I would have done this before you executed the agreement, regardless of attorney review.
Regardless of due dilly, there is no guarantee of anything.
In a more balanced market, buyers tended to pay more when offering with a home sale or close contigency because they are in effect, transfering risk to the seller. In a more balanced market, the property would have had probably had a better shot at being shown again, too. In this market, in most places, the old rules no longer matter.
Wow, in my area, that is Practicing Law without a Law Degree, and is really really bad. Unless you mean that they used a form that an attorney (or the state board, or whoever) drafted, which is an entirely different issue.
I have bought and sold property in NJ. Standard board contracts are used and agents typically fill in the blanks. Contracts are usually contingent upon a subsequent attorney review period that coincides with the home inspection period, where anything can happen. This creates the perception that the original contract is a draft of tems and conditions.
Like your state, I cannot alter the standard contract or do much other than fill in the blanks because I am not an attorney.
This is not the case or custom in all states. Interestingly, the more discretion some states give agents, the less likely the standard contract imposes an attorney review. I find this fasinating....yet, not my place to judge.
...This is not the case or custom in all states. Interestingly, the more discretion some states give agents, the less likely the standard contract imposes an attorney review. I find this fasinating....yet, not my place to judge.
Interesting observation. No attorney review required here (AZ), yet licensed agents are legally allowed to alter real estate contracts (add/remove conditions, etc). The only review required is by the agent's broker. Agents are required to take contract law courses for initial and renewal hours.
Interesting observation. No attorney review required here (AZ), yet licensed agents are legally allowed to alter real estate contracts (add/remove conditions, etc). The only review required is by the agent's broker. Agents are required to take contract law courses for initial and renewal hours.
Same here, we also have no attorney required review, and agents can write in a limited number of items, as instructed by their buyer (or seller for a counter offer or addendum), but the agent isn't writing up the contract from scratch. Adding clauses is sort of a grey area. Mostly, there are forms for anything major that is done on a regular basis, and other stuff is usually small scale. Writing in a clause under "Other Terms and Conditions" is generally small enough not to be considered practicing law, especially since the buyer, who is a party to the contract, is telling you what they want to say there, and you are just helping with the wording.
I've seen some addendums with 20 or 30 items on an addendum, specifying all sorts of additional terms, and to me, that crosses over into drafting a contract, and really shouldn't be done, unless the buyer or seller writes it, by hand, themselves in their own words.
...but the agent isn't writing up the contract from scratch. Adding clauses is sort of a grey area. Mostly, there are forms for anything major that is done on a regular basis, and other stuff is usually small scale. Writing in a clause under "Other Terms and Conditions" is generally small enough not to be considered practicing law, especially since the buyer, who is a party to the contract, is telling you what they want to say there, and you are just helping with the wording.
I've seen some addendums with 20 or 30 items on an addendum, specifying all sorts of additional terms, and to me, that crosses over into drafting a contract, and really shouldn't be done, unless the buyer or seller writes it, by hand, themselves in their own words.
Sounds like AZ agents may have more flexibility regarding contract modification. From our state constitution:
1. Powers of real estate broker or salesman
Section 1. Any person holding a valid license as a real estate broker or a real estate salesman regularly issued by the Arizona State Real Estate Department when acting in such capacity as broker or salesman for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of property, shall have the right to draft or fill out and complete, without charge, any and all instruments incident thereto including, but not limited to, preliminary purchase agreements and earnest money receipts, deeds, mortgages, leases, assignments, releases, contracts for sale of realty, and bills of sale.
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