Wednesday, March 13, 2013
The "72 Hour Clause"
What is the 72 hour or escape clause? How does it work, and when should you agree to the clause in your agreement and when not?
There is always questions relating to the use of this clause as Sellers believe that they can actually fall back on this legislation once they receive another offer, especially if the second offer is cash - this is not the case!
Lets start with the facts of the matter at hand: There are no legislation relating anything as a 72 hour clause, escape clause or anything remotely like such a clause in any legislation.
We use this clause when we receive an offer from a buyer which is conditional to the sale of another property. With other words, the clause should be inserted into the agreement of sale and purchase when the proposed purchaser still has another property that needs to be sold, prior such Purchaser can actually buy the property.
Every seller need to understand that such a conditional sale is really not a sale unless such property is sold. It is nice as a safeguard and a great number of these sale materialize due to the fact that such buyer is normally reluctant to sell the property prior finding and securing a new property. It is however very important to ensure that the terms of the agreement has been properly discussed and is reflecting in the offer to purchase document prior to accepting such an offer on property.
If your agent is not willing to ensure that such a clause is in your agreement when the agent present a conditional sale, find yourself another agent fast - the agent is not looking after your interest whatsoever! The terms of the offer should includes the period which the Buyer have to sell his home, the notice period should be properly defined, as well as the process regarding the notice period.
If you are the Seller should not be reluctant to accept such conditional sale, it could confirm that your asking price is in order, it assists with the demand of the property and many of these conditional sales realize in final sales when confronted with another offer to purchase the home.
We note that in some instances some sellers wish to include this clause when the sale is only conditional to the obtaining of finance. This should be considered very carefully as this might be great if you obtain a cash offer, but buyers will be reluctant to commit to the clause due to the effort that takes in the current financial restricted loan criteria to obtain finance for the purchase of a home.
It is further essential to allow enough time to obtain a mortgage loan as buyers are not always prepared for the demand from the various home loan departments requirements. Although we as estate agents prepare clients as best as possible we are not updated with their specific income sources and sometimes these takes more time than anticipated with the financial institutions.
For more information relating to purchase agreements, loan applications, purchase processes, you can contact the writer hereof per e-mail at mail or the writer below: