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What is a 72 Hour Clause and How Does It Impact Real Estate Transactions?
Definition & Meaning
A 72 hour clause is a provision in a real estate purchase contract that allows a seller to accept a buyer's contingent offer while still marketing the property. This clause enables the seller to entertain other offers, providing them with the option to accept a better offer if it arises. If the seller receives a more favorable offer, they can activate the clause by notifying the original buyer, who then has 72 hours to proceed with the purchase or forfeit their opportunity. The timeframe for this notice period can be negotiated between the parties involved.
Table of content
Legal Use & context
The 72 hour clause is primarily used in real estate transactions. It is particularly relevant in competitive markets where multiple buyers may be interested in a property. This clause allows sellers to maximize their options while still providing buyers with a fair chance to complete their purchase. Users can manage these agreements through legal forms available from resources like US Legal Forms, which offer templates drafted by experienced attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A homeowner receives a contingent offer from a buyer but also continues to show the home. After a week, another buyer makes a higher offer. The seller informs the original buyer of the new offer, activating the 72 hour clause, giving them three days to finalize their purchase.
Example 2: A seller accepts an offer with a 72 hour clause. If they receive a better offer, they must notify the first buyer, who can either proceed with the purchase or let the property go (hypothetical example).
State-by-state differences
State
Variation
California
Commonly used; often allows for negotiation of timeframes.
Texas
Frequently included in contracts; timeframe can vary.
Florida
Used in competitive markets; specific terms may differ by county.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Difference
Escape Clause
A provision allowing sellers to accept better offers.
Similar in function but may not specify a timeframe.
Kick-Out Clause
Similar to a 72 hour clause but often has more flexible terms.
Can allow for longer response times or different conditions.
Common misunderstandings
What to do if this term applies to you
If you are a seller considering a 72 hour clause, ensure it is clearly defined in your contract. If you are a buyer, understand your rights and obligations under this clause. It may be beneficial to consult with a real estate attorney or use US Legal Forms to access templates that can help you navigate this process effectively.
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