Contracts
A Tennessee buyer makes an offer that includes a 'kick-out' (bump) clause for the seller. The seller should understand this means:
AThe seller can cancel the contract at any time
BThe seller can accept a better offer if the current buyer's contingencies aren't removed within a specified period✓ Correct
CThe buyer can be removed from the property if needed
DThe seller's broker can find a new buyer without obligation to the current offer
Explanation
A kick-out clause allows the seller to continue marketing while under contract with a contingent buyer. If a better offer materializes, the seller notifies the contingent buyer who must remove their contingency within the specified time or be 'kicked out' of the deal.
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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.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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.
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