Join Wahi today and find out how easy it is to get real estate in the GTA.<\/span><\/p>\n[\/et_pb_text][et_pb_divider show_divider=”off” disabled_on=”off|off|off” admin_label=”Divider” _builder_version=”4.18.0″ _module_preset=”default” height=”5px” height_tablet=”” height_phone=”1px” height_last_edited=”on|phone” custom_padding=”||0px|||” locked=”off” global_colors_info=”{}”] [\/et_pb_divider][wahi_wahiButton url=”\/ca\/en\/real-estate\/sign-up” button_font_color=”#000000″ button_color=”#EB7161″ circle_color=”#000000″ border_color=”RGBA(255,255,255,0)” focus_color=”#000000″ is_white_hover_text=”on” _builder_version=”4.18.0″ _module_preset=”default” locked=”off” global_colors_info=”{}”]<\/p>\n
GET STARTED<\/p>\n
[\/wahi_wahiButton][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n
What is a Time Clause in Real Estate?<\/h2>\n
Real estate contracts can be extremely complex, especially when they\u2019re filled with legal jargon and what can feel like an endless number of provisions, including the escape clause. Buyers and sellers often misunderstand this clause, which can lead to all sorts of problems, even causing a buyer to lose their dream home.<\/p>\n
\u00a0–<\/span><\/p>\nA common assumption is that the escape clause or \u201c72-hour clause\u201d allows the buyer to back out of an agreement to buy the home within 72 hours. But this couldn\u2019t be further from the truth. Rather, when a real estate contract contains a time clause, such as an escape clause, a seller is able to keep their home on the market and accept another (better) offer should one be made. If a seller receives a better offer during the specified window of time, they can then activate the escape clause by notifying the original buyer about the new offer. From there, the original buyer is given one chance to agree to lift all contingencies that haven\u2019t been met and complete their purchase. They have 72 hours, or another mutually agreed-upon length of time, to do this. If they fail to do so, the contract is forfeited and the deal is cancelled.<\/p>\n
–<\/span><\/p>\nThe Home Sale Contingency and Escape Clauses<\/b><\/h3>\n
Historically, making an offer on a home was contingent on the buyer selling their existing home. So after an offer was made and the seller accepted it, they would take the home off the market for a set period of time to allow the buyer to sell their existing property. This time period varied but could be as long as three months (typically between 60 and 90 days).\u00a0<\/p>\n
\u00a0–<\/span><\/p>\nHome sale contingencies are ideal for the buyer. If they already own a home, they usually want to make sure it\u2019s sold before purchasing a new property. There are many reasons why a buyer might wish to do this. The number one reason is to avoid paying two mortgages at once \u2014 a mortgage for your existing home and one for your new home. Including such a condition in an offer allows the buyer to walk away from a deal if they can\u2019t find a buyer for their current home. The offer is only firm once the buyer\u2019s existing home has been sold. While advantageous for the buyer, sellers often prefer to avoid this contingency as there is no guarantee that the buyer will sell their home quickly, if at all, leaving them vulnerable.\u00a0<\/p>\n
\u00a0–<\/span><\/p>\nFrom the seller\u2019s point of view, having to take their property off the market for any period of time is not ideal. The escape clause was designed to prevent the seller from losing out on other potential offers while the buyer sells their current property. This means that the seller can keep the property on the market after a conditional offer has been accepted. If in the meantime, the seller receives an unconditional or firm offer, one that is not contingent on the buyer selling their existing home, the seller must send written notice to the original buyer. The original buyer then has 72 hours, or another pre-agreed time frame, to either forfeit the home sale contingency (and all other contingencies that haven\u2019t yet been met) or pull out of the contract altogether. If the buyer fails to make a decision during the notice period, the original offer is void.<\/p>\n
[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” background_color=”#edf7f3″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” header_2_text_align=”center” header_2_text_color=”#38505b” header_2_font_size=”2.63rem” header_2_line_height=”3.75rem” max_width=”800px” module_alignment=”center” header_2_font_size_tablet=”32px” header_2_font_size_phone=”27px” header_2_font_size_last_edited=”on|phone” header_2_line_height_tablet=”3.75rem” header_2_line_height_phone=”32px” header_2_line_height_last_edited=”on|phone” global_colors_info=”{}”]<\/p>\n
“Real estate contracts can be extremely complex, especially when they\u2019re filled with legal jargon and what can feel like an endless number of provisions, including the escape clause. “<\/h2>\n
[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” background_color=”#ffffff” custom_padding=”86px||3px|||” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||74px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n
How Long is the Escape Clause?<\/b><\/h3>\n
It\u2019s important to note that while the term \u201c72-hour clause\u201d implies that the length of time is 72 hours, it is a bit of a misnomer. In reality, the notice period can be negotiated. Depending on what each party decides, the notice period could be less than or greater than 72 hours. The name of the clause is also misleading as even if the notice period is 72 hours, it may actually be longer than that if these hours fall outside of a business day, such as on a weekend and statutory holiday.\u00a0<\/p>\n
–<\/span><\/p>\nWhen Are Escape Clauses Used?<\/h2>\n
The clauses are most often found in real estate contracts where the buyer has included a home sale contingency. If you are a first-time buyer who does not currently own a home and therefore has no reason to include a home sale contingency in your offer, you are unlikely to find an escape clause in your contract. Further, escape clauses are less common in seller\u2019s markets as buyers are unlikely to include conditions that make their offer less attractive, like a home sale contingency. However, in a buyer\u2019s market, a buyer can afford to include a home sale contingency, which could lead to an escape clause in their real estate contract.\u00a0<\/p>\n
–<\/span><\/p>\nHow the Seller Benefits From the Escape Clause<\/h2>\n
Sellers may derive several benefits from the escape clause. First, this provision allows the seller to make a sale more quickly. Without this provision, a seller could be forced to take their house off the market for several months while the buyer sells their home. This can mean a significantly delayed closing. Second, the escape clause may give sellers access to multiple offers, allowing them to secure a better offer on their home. This better offer might be free from conditions or even be of a higher monetary value.\u00a0<\/p>\n
–<\/span><\/p>\nHow the Buyer Benefits From the Escape Clause<\/h2>\n
Though the escape clause was originally established to benefit the seller, it also offers several benefits to the buyer. For example, it protects the buyer from a situation where they finally sell their existing home, only to discover that the home they thought they were buying has been sold to another buyer.\u00a0<\/p>\n
\u00a0–<\/span><\/p>\nIt\u2019s also worth noting that while it\u2019s typically the seller who requests an escape clause be added to a contract, the buyer has the right to refuse this request or to draft an escape clause with stipulations. If the buyer agrees to an escape clause, they can work with a lawyer to redraft the clause so it features stipulations that are beneficial to them. Such stipulations may include that the seller is only allowed to accept firm (unconditional) offers, that only offers over a specific amount can trigger the escape clause, or that the buyer can use the clause to recover their deposit if their financing falls through. As a buyer, it\u2019s critical to have a lawyer draft and review all aspects of your contract, including the escape clause, to ensure it satisfies your needs.<\/p>\n
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