Contracts
Which clause in a purchase contract allows a seller to continue marketing the property and accept a better offer, giving the original buyer the right to remove a contingency or lose the contract?
AAcceleration clause
BKick-out clause (right of first refusal clause)✓ Correct
CSubordination clause
DDefeasance clause
Explanation
A kick-out clause (sometimes called a right of first refusal clause) allows the seller to keep marketing the property after accepting a contingent offer. If a better offer comes in, the original buyer must either waive the contingency or forfeit the contract.
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Key Terms to Know
Right of First Refusal
A contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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