72-hour clause
Encyclopedia
A 72-hour clause, typically inserted in real estate sale contracts
, is also known as an escape clause
, release clause, kick-out clause, hedge clause or right of first refusal clause.
The 72-hour clause is a seller contingency which allows the seller to accept a buyer
's contingent offer to purchase
his/her property
, while allowing the seller to continue to market the property.
If the seller now receives another (better) offer to purchase the same property, he/she can also accept this offer, as a back-up offer. The seller can then activate the escape clause by notifying the original buyer about the back-up offer.
The first buyer now has a specified period of time to fulfil all the buyer contingencies in the contract of sale, or cancel the contract and lose the property. If the buyer cannot fulfil the contingencies in time, the original contract will cancel and the back-up offer will move into first position.
The term 72-hour clause can be somewhat misleading, because the notice period within which the buyer must fulfill the buyer contingencies can be negotiated. The effective notice period may therefore be longer or shorter than 72 hours. Further ambiguities arise if the 72 hours were only considered counted on business working days, excluding weekends and legal holidays.
Real estate contract
A real estate contract is a contract for the purchase/sale, exchange, or other conveyance of real estate between parties. Real estate called leasehold estate is actually a rental of real property such as an apartment, and leases cover such rentals since they typically do not result in recordable...
, is also known as an escape clause
Escape clause
An escape clause is any clause, term or condition in a contract that allows a party to that contract to avoid having to perform the contract....
, release clause, kick-out clause, hedge clause or right of first refusal clause.
The 72-hour clause is a seller contingency which allows the seller to accept a buyer
Buyer
When someone gets characterised by their role as buyer of certain assets, the term "buyer" gets new meaning:A "buyer" or merchandiser is a person who purchases finished goods, typically for resale, for a firm, government, or organization...
's contingent offer to purchase
Offer and acceptance
Offer and acceptance analysis is a traditional approach in contract law used to determine whether an agreement exists between two parties. Agreement consists of an offer by an indication of one person to another of the offeror's willingness to enter into a contract on certain terms without...
his/her property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
, while allowing the seller to continue to market the property.
If the seller now receives another (better) offer to purchase the same property, he/she can also accept this offer, as a back-up offer. The seller can then activate the escape clause by notifying the original buyer about the back-up offer.
The first buyer now has a specified period of time to fulfil all the buyer contingencies in the contract of sale, or cancel the contract and lose the property. If the buyer cannot fulfil the contingencies in time, the original contract will cancel and the back-up offer will move into first position.
The term 72-hour clause can be somewhat misleading, because the notice period within which the buyer must fulfill the buyer contingencies can be negotiated. The effective notice period may therefore be longer or shorter than 72 hours. Further ambiguities arise if the 72 hours were only considered counted on business working days, excluding weekends and legal holidays.