In certain transactions, buyers may wish to make their contracts contingent on them receiving the proceeds from the sale of their current home. In this situation, the buyer will attach the Addendum for Sale of Other Property by Buyer (TXR 1908, TREC 10-6) to the contract. While this provides the buyer with the benefit of the contingency, in return, it affords the seller a benefit as well. The seller may continue to receive, negotiate, and accept back-up offers, which would then allow the seller to ask the first buyer to waive the contingency if a better offer is received.
When a seller receives a back-up offer with more favorable terms than the first offer, the seller must execute the second offer with the Addendum for Back-up Contract (TXR 1909, TREC 11-7) attached. The seller can then use Notices Regarding Contingency Under Addendum for Sale of Other Property by Buyer (TXR 1912) to notify the first buyer of the accepted back-up offer and to allow the first buyer to either waive the contingency or terminate the transaction. Just because the seller has received a back-up offer does not give the seller the ability to ask the first buyer to waive the contingency.
I am not sure I understand the last sentence.
“Just because the seller has received a back-up offer does not give the seller the ability to ask the first buyer to waive the contingency.”
The sentence before says “….notify the buyer of the accepted back-up offer and allow the first buyer to either waive the contingency or terminate the transaction?”
Doesn’t the last sentence contradict that?
Its saying “just because” there is a back up offer, doesn’t mean the seller should ask the contingent buyer to waive their contingency. Its a little misleading, but the key word is JUST BECAUSE. The back up offer has to be better than the current offer. First opportunity is given to the contingent offer to decide what they want to do after knowing the seller has received a Back Up Offer that they are willing to accept because the terms are better than the contingency. The contingency contract now has the opportunity to better their terms by waiving the contingency… Read more »
The phrase “Just Because” & “Received” is important because Seller would have to formally accept a back-up contract using the Back-up Addendum and then shall notify the 1st Buyer of the acceptance AND that Seller requires the Buyer to waive their contingency. Simply, receipt of the offer is not enough to ask the Buyer in the 1st position to waive their contingency. Also – nowhere in the Addendum does it say that the 2nd Buyer’s offer has to be ‘more favorable’ than the 1st offer accepted. It simply states: “If Seller accepts a written offer to sell the Property, Seller… Read more »
LOL! My thoughts exactly!
I think it means that seller cannot just ask first buyer to waive the contingency, he has to give the buyer the choice between waiving the contingency OR terminate.
This post is very confusing. You said “if a better offer is received.” That implies they could give the notice to the first buyer to waive the contingency even if the backup has the same contingency, but would net more money. It’s been my understanding that it has to be a backup that isn’t contingent on the sale of another property. The notice doesn’t say that so maybe I’m wrong? Then your last sentence says that just because the seller has received a backup, they don’t automatically have the right to give the notice. However, you don’t say what conditions… Read more »
The phrase “Just Because” & “Received” is important because Seller would have to formally accept a back-up contract using the Back-up Addendum and then shall notify the 1st Buyer of the acceptance AND that Seller requires the Buyer to waive their contingency. Simply, receipt of the offer is not enough to ask the Buyer in the 1st position to waive their contingency. I have been taught in CE classes that you can accept a backup contract that has the same contingency and proceed forward with providing notice to the 1st Buyer under the Addendum. Also – nowhere in the Addendum… Read more »
If the Seller accepts a Back-up Contract, how soon do they have to notify the first Buyer, or can they wait as long as they want?
I don’t see any mention of a time frame. I think it just depends on whether the Seller wants to force the Contingency to end or not.
I’ll be the odd person who understands this, as written.
I have a Contingent Contract right now – should another Buyer come to the table with an Offer more favorable to my Sellers end goal and they want to accept this Back Up, then they would use the Addendum for Back-Up Contract and provide the Contingent Buyer the opportunity to remove the contingency and close the transaction on or before the terms of the Back Up (remember the contingency terms have to be more favorable than the Back Up) OR terminate their Contingency Contract and receive their EMD.
You all are reading way too much between the lines! “Paragraph B of the Addendum for Sale of Other Property by Buyer clearly states, If Seller accepts a written offer to sell the Property, Seller shall notify Buyer (1) of such acceptance AND (2) that Seller requires Buyer to waive the Contingency. Buyer must waive the Contingency on or before the _________ day after Seller’s notice to Buyer; otherwise the contract will terminate automatically and the earnest money will be refunded to Buyer.” I agree the article was very poorly written and does not state what our contracts actually say!… Read more »
Tony Hager, I totally agree with everything you just posted! This might be a good time to address “Active Kick-Out” status. I am always shocked at how many agents do not know or understand this status. It relates directly to that blank you included in your first paragraph, since that blank will be filled in by number of days.
Let’s keep going on this topic! What if the buyers homes that is contingent doesn’t sell by the date listed the contingency form! What happens to the Earnest Money? Does it get automatically released back to the buyer as it states in the contingency?
As is often the case, the article is poorly written. The second offer could be more favorable simply because it doesn’t have similar contingencies. It could be more favorable because it’s from your girlfriend. The point is simply, if the second offer is deemed more favorable (more “desirable” might have been a better choice of words), to the Seller, then if the Seller takes all of the formal steps (because otherwise, the Seller might just be bluffing a second offer to induce the first Buyer to waive the contingency) to notify first Buyer, first Buyer either chooses to eliminate the… Read more »
what does this mean? “Just because the seller has received a back-up offer does not give the seller the ability to ask the first buyer to waive the contingency.”