Contracts
In Hawaii, what is an 'escape clause' or 'first right of refusal contingency' in a purchase contract?
AA. A clause allowing the buyer to escape the contract for any reason
BB. A clause allowing the seller to continue marketing while under contract, and to accept a new offer if the first buyer doesn't waive their contingency✓ Correct
CC. A clause requiring the seller to accept any full-price offer
DD. A provision granting the buyer more time to secure financing
Explanation
A 'kick-out clause' or escape clause allows the seller to keep marketing the property. If a better offer comes in, the seller can notify the first buyer to remove contingencies within a specified time or release them.
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Key Terms to Know
Contingency
A 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.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
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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