Kick-Out Clause
Definition and meaning of Kick-Out Clause in real estate.
Kick-out clause is a provision in a home purchase agreement that allows a seller to keep marketing their home and accept a backup offer if the buyer has contingencies that take time to resolve.
In more detail
This clause is most common when a buyer submits an offer contingent on selling their current home first. Sellers accept these offers to lock in a price, but they want protection against the home sitting off the market indefinitely. If the seller receives a new, non-contingent offer, they notify the first buyer, who typically has twenty-four to seventy-two hours to match the new offer or walk away.
This clause balances risk, helping sellers avoid missed opportunities while giving buyers a chance to secure the property.
Key facts
| Category | Buying & Selling |
|---|---|
| Required by | Sellers accepting offers with home sale contingencies |
| Typical timing | Gives the buyer twenty-four to seventy-two hours to respond |
| Key benefit | Protects sellers from having their homes tied up indefinitely |
A seller accepts an offer contingent on the buyer selling their condo, including a seventy-two-hour kick-out clause. When a second buyer makes a clean offer, the seller activates the clause, forcing the first buyer to remove the contingency or let the seller cancel the contract.
Frequently asked questions
Can a buyer refuse to remove contingencies when a kick-out clause is activated?
Yes, the buyer can choose not to remove the contingencies. In that case, the contract is cancelled, the buyer gets their earnest money back, and the seller accepts the new offer.
Does a kick-out clause apply to home inspections?
Typically no, kick-out clauses are reserved for home sale contingencies rather than standard, short-term contingencies like home inspections or appraisal reviews.