Unless you are experienced with the legal terminology that is used in a real estate contract, you may have a hard time making your way through all the technical language that is included. One phrase you may have come across in your reading is the 72 hour better offer clause.
Put simply, a 72-hour better offer clause works like this. If you are selling your property and contemplating entering into a contract to sell to a buyer which will take your property off the market for a period of time (ie, the buyer may also be required to sell their property to purchase yours), something you may wish to consider negotiating is adding a special condition to the contract which, in the event another buyer comes along whilst the contract is on foot, gives you the ability to require the buyer to proceed unconditionally with the settlement of the contract.
This can provide you with some protection by offering you a way back onto the market whilst the contract is on foot.
Let’s say in order to buy your dream home, you must sell your current residence first. So you put down an offer on your dream home which is dependent on the sale of your current house. Easy enough. You then have a potential buyer for your current residence, but they also need to sell their home. Here is where you negotiate with the potential buyer for a 72 hour better offer clause to be included in your contract. The deal is sealed and your dream home is one step closer.
Your property remains on the market but then let’s say another buyer makes an offer, one who does not need to sell their home first. Here comes the 72-hour part. You give the first buyer notice of the better offer and they then have 72 hours to either make the contract unconditional or terminate the contract.
If you enter into a contract with another buyer whilst the first contract with the 72 hour better offer clause is on foot, you will need to ensure that the second contract also contains a special condition making that contract subject to the termination of the first contract.
In considering the above, the seller on your dream home may also wish to include a 72 hour better offer clause. If the seller enforces the 72 hour better offer clause on your dream home contract, you will need to be mindful of the fact that you will also then have 72 hours to either make the contract unconditional or terminate the contract. If you wish to keep your plans for your dream home intact, a discussion with your bank on obtaining a bridging loan may be the answer if you have been unable to sell your property and you can then make your dream home contract unconditional.
If you would like to learn more about 72 hour better offer clauses, discuss examples of them and how they operate or find out if they are appropriate for your circumstances, please contact us for more information. We are here to answer any questions you may have.
The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.