If an Offer to purchase a property includes a condition of Financing or a Home Inspection, these conditions are typically written with a duration of 5 days. That means the Buyer has 5 days to either fulfill or waive the condition, in order to firm up the deal. If the Buyer cannot get the required funds or if the home is discovered to have a structural issue and the Buyer does not want to continue with the purchase of the property, the Buyer can be released from the contract and have their deposit returned, if they do not firm up within that prescribed time limit.
But if the purchase is conditional on the Sale of the Buyer’s Own Property, that condition could be for 30 days or more. A Seller does not want his or her property tied up for that length of time, so an Escape Clause is included that states if the Seller receives another satisfactory Offer, the Seller can notify the Buyer that they have 48 hours to waive the condition and firm up the deal or the Offer will be null and void. For those 48 hours, the power to continue with the Agreement of Purchase and Sale resides with the original Buyer.
If the original Buyer’s home is not sold and the Buyer cannot proceed with a firm purchase, then both that Buyer and the Seller have to sign a Mutual Release, agreeing to end their contract together. The triggering of the Escape Clause has allowed the Seller to then accept the new Offer from the 2nd Buyer.
That can be a tough lesson to learn for the Buyer forced to walk away from a home they wanted to buy. A Buyer that sells his/her own home before making an Offer to purchase a new home is in a much stronger negotiating position.
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