Here’s a complete list of possible questions about the Back-Up Offer Addendum, along with explanations for each.
- What is the purpose of the Back-Up Offer Addendum?
It is used to make an offer on a property that is already under contract with another buyer, allowing the offer to become primary if the first buyer’s contract is canceled.
- When should the Back-Up Offer Addendum be used?
It should be used when a buyer wants to submit an offer contingent upon the cancellation of an existing purchase agreement between the seller and another buyer.
- How is the back-up offer position established legally?
The addendum specifies that the agreement only becomes effective once the seller gives written notice that the first contract has been canceled.
- Does the buyer’s earnest money deposit get submitted right away?
This depends on the terms in the addendum. It can be submitted immediately or only once the back-up offer becomes the primary contract.
- Can the buyer withdraw the back-up offer before it becomes primary?
Yes, the buyer can usually withdraw the back-up offer before receiving the seller’s written notice that the first contract has been canceled.
- Does the inspection contingency period start immediately?
No, it typically starts only after the back-up offer becomes the primary agreement, but the addendum should specify exact timing.
- Can the terms in the back-up offer be changed before it becomes primary?
Yes, but changes require a written amendment agreed upon by both the buyer and seller.
- How long is the back-up offer valid?
The addendum should specify an expiration date. If the first contract hasn’t been canceled by that date, the back-up offer becomes void.
- What happens if multiple back-up offers are received?
The seller can accept more than one back-up offer, each ranked in priority, but this must be clearly outlined in the agreements.
- Can the seller continue to negotiate with the first buyer while having a back-up offer in place?
Yes. The seller may continue with the first buyer until they cancel or close, but must honor the back-up offer terms if it becomes primary.
- Does the back-up buyer have to perform inspections before becoming primary?
No, inspections are generally conducted only after the back-up offer becomes the primary contract.
- What are the risks for the back-up buyer?
The property may never become available, tying up the buyer’s attention and possibly delaying their ability to pursue other properties.
- Is the earnest money refundable if the back-up offer expires or is withdrawn?
Yes, if the deposit has been submitted before the offer becomes primary, the terms should specify that it is refundable if the contract never activates.
- Should the back-up offer mirror the terms of the first offer?
Not necessarily, but it should be competitive and realistic to improve the chances of being accepted.
- How is the activation of the back-up offer communicated?
The seller must provide written notice to the back-up buyer’s agent that the first contract has been canceled and the back-up is now primary.
Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.
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