Conditional Offers and the 48 Hour Clause

Posted on: Wednesday, September 11th, 2013

When listing your property for sale you will often receive an offer that is conditional upon the buyer satisfying certain conditions before the deal becomes firm and binding. As a seller, this means that while you have accepted an offer, you do not yet have a firm and binding offer. Only once the conditions have been met or waived does the deal become firm and your house is considered sold.

The conditional period is often for around five working days, and once that time period has expired, you will either have a firm offer or you will be free to move on to find a new purchaser. During this conditional period, many people may wonder whether or not the seller is allowed to continue to show the home to other potential buyers, the answer is yes.

Agents are required to disclose to any other potential buyers that there is a conditional offer on the property which has been accepted. If another buyer is still interested in making an offer, it will include a condition which relates to the seller being released from the agreement which is conditional. It is in the sellers best interest to keep the home on the market up until the deal becomes firm as it will protect them in situations where the conditions are not fulfilled in the first offer and as a result becomes null and void.

The 48 Hour Clause

Another approach which can be taken for conditional offers to protect the seller is to include what is often referred to as the 48 hour ‘trigger’ clause which encourages the potential buyer to firm up the offer or allows the seller to be free to move on to a second offer within a 48 hour time period. If the seller receives a second offer before all of the conditions have been satisfied or waived in the first offer, notice must be given to the first potential buyer that the 48 hour clause has become effective. The buyer then has a period of 48 hours to satisfy or waive all conditions, failing which, the agreement is cancelled and the seller is allowed to move forward with the second offer. A typical 48 hour clause reads as follows:

The Seller may continue efforts to sell the property. If a third party submits an offer to purchase the property at a price and upon terms acceptable to the Seller, the Seller shall give written notice to the Buyer and the Buyer shall have 48 hours after receipt of the notice to waive or fulfill all conditions herein. If the Buyer fails to execute and deliver the waiver / fulfillment in the specified time, the Seller may accept a third party’s offer, in which event, this contract shall be null and void, and the Seller and the Buyer shall be released from all their obligations hereunder. If the presently existing offer to purchase by the Buyer is subject to financing, the financing requirement must be met. It may not be waived without the Seller’s written approval. If the offer is rendered void because the conditions were not removed as required, the deposit shall be returned to the Buyer.

You might want to insert ‘two business days’ rather than ‘48 hours.’ It is important to be careful with this clause as you do not want to encounter a situation where the home is sold twice. The second offer can only be accepted once the first offer becomes null and void.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

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