Conditional Offers
After you've negotiated and accepted the buyer's offer, there may still be some loose ends-conditions-that one or both of you will need to tie up before the sale can close. An offer of this nature is called a conditional offer.
For example, your buyer may need to secure sufficient mortgage financing or sell his or her current home within a certain period of time. Or, you may have to correct flaws in your property that a home inspection reveals. Alternatively, there may be an adjustment in the bid price to allow for these flaws.
If the conditions are satisfied within the allotted time frame, the offer becomes "firm and binding." If not, the deal is off, and the deposit is returned to the buyer.
Protect yourself from legal limbo with an escape clause.
Before you agree to a conditional offer, ask your lawyer or notary to write in an escape clause. An escape clause (or "kick-out" clause) will usually state that if you receive another acceptable offer while you're waiting for conditions to be met, your first buyer must either waive the condition(s) and close the sale or forfeit the deal. Escape clauses are especially common when a sale is contingent upon the buyer selling his or her home.
Conditions most often arise during the home inspection. For more information, see Home Inspections, Defects and Disclosure.
|
