What Is A Kick-Out Clause And Should You Include One?
Author:
Victoria ArajMar 4, 2024
•6-minute read
Suppose you’re driving home from work one day and you spot a “For Sale” sign in front of your dream home. You’d love to buy it, if only you could sell your current home.
In a buyer’s market, a home buyer may be able to sweeten their offer by suggesting that both parties agree to having a kick-out clause in the real estate purchase agreement. Simply put, the home buyer would agree to let the seller continue showing their home while the buyer puts their efforts into getting contingencies resolved ASAP.
Let’s take a closer look at what a kick-out clause is, how it works when you include one in a purchase agreement, and who might benefit from one.
What Is A Kick-Out Clause?
A kick-out clause allows home sellers to continue showing and accepting offers even after accepting a contingent offer. A kick-out clause is a provision in a home’s sales contract that allows sellers to accept a contingency while still showing their home in hopes of receiving a non-contingent offer.
In general, if the seller gets a better offer, the clause allows the seller to “kick out” the contingency buyer and proceed with a non-contingent second offer. The contingency buyer then has the option of removing the contingency from the contract or walking away from the home sale.