• Orlando Realtor Explains The Kick-Out Clause

  • kick-out clauseOrlando Realtors are highly aware that no homeowner likes to sign a contract that’s contingent on a potential buyer selling their primary residence. Most homeowners won’t be approved by any lender to purchase a new home without first selling the one that they live in anyway.

    Many people that are planning a move like to know where they’re going to live before they put their own residence up for sale. This can be tricky because no homeowner in their right mind will want to take their home off the market to wait and see if the interested buyer is able to sell their home first.

    Enter the “kick-out” clause

    A “kick-out” clause is a contingency that allows a buyer to terminate the contract if they aren’t able to sell their primary residence first. This contingency also entitles them to get their deposit fully refunded. However, the “kick out clause also benefits the seller.


    Sellers don’t want to take their home off the market only to be stuck waiting around for a buyer that may or may not close. It’s because of this reason that under the “kick-out” clause, sellers are allowed to continue marketing their property for sale while the potential buyer tries to sell his or her primary residence.


    The “kick-out” clause from the seller’s side allows the seller to continue marketing the property and if another qualified buyer steps up, the sellers are required to give the original buyers a certain period of time [usually 3 days] to either remove the contingency [proceed with the contract] or they must withdraw themselves from the contract.
    Read the fine print

    Even if the potential buyers are faced with the three day kick-out period and decide to proceed with the contract anyway, they may still be able to get out of it because they can’t get financing for the purchase. Most all standard contracts include a contingency which allows the buyer to terminate the contract if they can’t get a loan to purchase the home.

    This can get kind of messy for both buyer and seller. Even if the buyer removes the sale contingency and wants to proceed with the purchase, it’s highly unlikely that a lender will approve a home loan until their primary home gets sold first. In a sense, the seller gets the short end of the stick because the potential buyer can still walk and and keep their deposit and everything has been a waste of time.

    Sellers Beware!

    If a seller finds themselves in a situation like this they should include some very specific language to protect themselves. Something like if the buyers are presented with the 3 day kick-out period and wish to delete the contingency and proceed with the original contract, they must demonstrate to the sellers [to the satisfaction of the sellers] that they are able to qualify for the loan. In most cases the buyers don’t have the funds to proceed with the purchase.

    Fair to Buyers and Sellers

    If you look at it from the buyer’s point of view this agreement is fair as long as the seller doesn’t abuse it, like by using the agreement to get out of the contract because they received a higher offer from a third party.

    For sellers, it’s also a fair agreement because even though they have a signed contract, they can continue to market the house. They even have the right to take back up contracts when offered. Sellers should make sure that their real estate agent continues to go full speed on the marketing of the property even after you’ve signed the first contract.

    If you need help buying or selling a home in Orlando call us today at 407.902.7750

    John Conde Orlando Realtor