Contingent Sale Addendum Rewritten
Release Date: 04/01/11; revised 04/30/14
(Note: the original version of this Q&A appeared in the April 2011 issue of Insight Magazine)
Dear Forms Guy: I just got an offer on one of my listings. The buyer needs to sell and close on his current home so the
offer includes a Contingent Sale Addendum (form 2A2-T, copyright 1/1/2011). The seller isn’t too excited about tying her
property up with a buyer who has to sell and close on another property, but she hasn’t had any other offers and I assured
her that she could kick the buyer out if she got a better offer and the buyer wasn’t willing to waive the contingency. Then I
took a closer look at the Addendum and it doesn’t seem to give the seller any kick-out rights. Am I missing something?
Sincerely, Ray Bob
Dear Ray Bob: No, Ray Bob, you’re not missing anything. There is no kick-out provision under the new version of the
Contingent Sale Addendum. Sincerely, Forms Guy
Ray Bob: Why the change?
Forms Guy: The Contingent Sale Addendum has been substantially rewritten. The primary goal in revising all of the
addenda to the Offer to Purchase and Contract was to make them “work” with the due diligence process in the contract to
the extent possible. Thus, the contingent sale process has been incorporated in part into the due diligence process. Another
goal in revising the addenda was to simplify them to the extent possible, just as the contract itself has been simplified.
Ray Bob: How has the contingent sale process been made a part of the due diligence process?
Forms Guy: If the buyer’s house is not under contract at the time the buyer enters into the contract with the seller, the
buyer will have the due diligence period to get the buyer’s house under contract. If the buyer doesn’t deliver a contract on
the buyer’s house to the seller prior to the end of the due diligence period in the contract with the seller, the contract is
null and void and the buyer gets the earnest money deposit back. This is made clear in the second sentence in paragraph
1(a) of the addendum.
Earl Bob: What if the buyer’s house does go under contract during the due diligence period?
Forms Guy: If the buyer’s house goes under contract during the due diligence period, or if the buyer’s house was already
under contract at the time the buyer entered into the contract with the seller, the buyer has some protection beyond the due
diligence period. This is made clear in the first sentence in paragraph 1(a). This is one of a small handful of conditions
that “survive” the due diligence period.
Ray Bob: What protection does the buyer have after the end of the due diligence period?
Forms Guy: Under paragraph 1(b) of the addendum, if the buyer’s house doesn’t close by the settlement date in the
contract with the seller, the buyer has three days following the settlement date to terminate contract with seller and get a
refund of the earnest money deposit. Note that time is “of the essence” regarding the buyer’s right to terminate.
Ray Bob: What if the closing on the buyer’s house has been delayed for a few days and the buyer doesn’t want to
terminate the contract with the seller?
Forms Guy: If the closing on the buyer’s house is delayed so that it will take place more than three days after the
settlement date in the contract with the seller, the buyer can still close on the buyer’s house and then close on the seller’s
house. However, if the buyer chooses not to terminate the contract with the seller within three days following the
settlement date, the buyer will lose the earnest money deposit if the closing on the buyer’s house falls through and the
buyer is unable to close on the seller’s property.
Ray Bob: If the buyer decides not to terminate, how long would the buyer have following the settlement date in the
contract with the seller to close on the seller’s property?
Forms Guy: According to paragraph 13 of the Offer to Purchase, a delaying party has up to 14 days following the
settlement date to close. Following the 14-day period, the non-delaying party has the right to terminate the contract.
Ray Bob: OK, I understand. Now tell me why the kick-out clause was taken out.
Forms Guy: Sure, Ray Bob. There were a couple of reasons. For one thing, if the buyer has paid a non-refundable due
diligence fee, it didn’t seem fair to give the seller a right to kick the buyer out during the due diligence period. We could
have figured out a way to solve that issue, but it probably would have involved making the kick-out mechanism even
more complicated than it already was – four of the eight paragraphs in the old version of the Contingent Sale Addendum
related to the seller’s kick-out. Removing the kick-out provision altogether greatly simplified the addendum, and, as I said
earlier, simplification was one of our goals.
Ray Bob: OK, since the seller no longer has any kick-out rights, doesn’t the seller need to be careful about how long the
due diligence period is and how far out the settlement date should be?
Forms Guy: Absolutely. The length of the due diligence period and the date of settlement are, of course, both negotiable,
but I would recommend that the seller should try to avoid a long diligence period and/or a drawn-out settlement date. If
the seller has not found another buyer by the end of the due diligence period, and the seller believes that the buyer may be
close to getting his or her house under contract, the seller can always extend the due diligence period and the settlement
date by written agreement.
Ray Bob: Is there a form for that?
Forms Guy: Yes. The Agreement to Amend Contract form (form 330-T, copyright Jan. 1, 2011) may be used to extend
the due diligence period. If an additional due diligence fee and/or additional earnest money will be paid in consideration
for the seller’s agreement to extend the due diligence period, the form may be used for those purposes also.
Ray Bob: Last question, Forms Guy. What happens if the buyer’s property is under contract or goes under contract during
the due diligence period and then the contract on the buyer’s property falls through? Can the seller terminate the contract
with the buyer if that happens?
Forms Guy: If that happens, paragraph 2 of the addendum states that the buyer is obligated to notify the seller about the
termination, and then either the seller or the buyer may terminate the contract on the seller’s property. In either case, the
buyer is entitled to a refund of the earnest money deposit. In addition, if an existing contract on the buyer’s property falls
through during the Due Diligence Period in the contract on the seller’s property, and the seller elects to terminate, the
buyer would also be entitled to a refund of any Due Diligence Fee that had been paid.
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