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Sale or Lease of Buyer’s Property Contingency Exhibit (F601)
I'm beginning to see Sellers accept offers allowing a contingency for the Buyer to sell their current home. Years ago, these types of contracts were very common! Let's take this month to review this form so that we aren't surprised when we start seeing it in offers.
In The Red Book page 411, Seth Weissman and Ned Blumenthal explain the form in this way:
"The GAR Forms include a Sale or Lease of Buyer's Property Contingency Exhibit that allows the buyer to condition the purchase of a new property on the sale or lease of an existing one. The contingency gives the sellers a kick-out right if the appropriate box on the contingency exhibit is selected and agreed to by all parties. A kick-out clause gives the seller a right to terminate the contract if a better offer for the property is made by a second buyer and the buyer who has the property under contract does not quickly meet certain conditions upon receiving notice of the better offer. The buyer who has property to sell or lease must list the property with a real estate broker for a sales price or rent not to exceed a certain amount."
If your client uses this form, it's important that you review their responsibilities and timelines. These deadlines are for the contingency portion (not the kick-out).
1. If the existing contract is terminated, Buyer shall immediately notify the Seller. The Buyer has the right, but not the obligation to terminate and receive a refund of Earnest Money
2. If the Buyer does not terminate, Seller has the right, but not the obligation to request that Buyer deliver an Amendment signed by Buyer to remove all contingencies and Due Diligence from the contract.
3. If Seller does not exercise this right within three (3) days from Buyer’s notice that Existing Pending Contract has terminated, then Seller’s right to request the amendment on this basis shall be waived.
4. In the event Buyer does not deliver the amendment within three (3) days of Seller’s request, then Seller shall have the right but not the obligation to terminate the Agreement in which case Buyer shall have the right to a refund of earnest money. If Seller does not terminate the Agreement within three (3) days, then Seller’s right to terminate the Agreement on this basis shall be waived.
If the Exhibit is subject to a Kick-Out Clause, the additional deadlines/responsibilities are as follows:
1. If the Seller receives a bona fide offer they'd like to accept, the Seller must give notice to the Buyer.
2. If the Buyer wants to remain in the contract, they must follow the pre-negotiated deadline to deliver to Seller additional earnest money (if any) and an Amendment to Agreement removing the contingencies as checked in section A or B of the Exhibit.
3. In the event Buyer does not deliver within the time period stated above; (1) the additional earnest money (if any referenced above) to Holder and (2) the above-referenced signed Amendment to Seller, then this Agreement shall terminate and Buyer shall be entitled to a full refund of Buyer's earnest money.
TC Disclaimer: Since TCs are not often included in Notices from Buyer to Seller or Seller to Buyer, we are unable to provide deadline assistance for these types of conditional deadlines.
SS 332 WALK THROUGH LIST, ITEMS COMPLETED AFTER CLOSING
Notwithstanding anything contained herein to the contrary, Buyer and Seller agree that all items on the Walk Through List shall be completed by Seller in a good and workmanlike manner no later than ______________ days after the closing. This stipulation shall survive the closing.
Monday, 10/10 Columbus Day
Friday, 11/11 Veterans Day
Thursday, 11/24 Thanksgiving Day
Friday, 11/25 (Day after Thanksgiving--Georgia state holiday & many attorneys' offices are closed)
Monday, 12/26 Christmas Day observed
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