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What is a Kickout Clause & How Does it Work?

If you've been navigating the real estate market, you might have come across terms that sound a little strange. Today, I'm going to give you the basics on one: the Hubbard or kickout clause. Whether you're a seller or buyer, understanding this clause can be a game-changer in how you view and handle property transactions.

What is a Hubbard Clause?

Imagine you're selling a house, and a buyer comes along who loves it but has a catch: they need to sell their current home first. Enter the Hubbard clause. This provision allows the buyer to enter into a contract with you while giving them a specified amount of time to sell their existing property. It's like saying, "I'll buy your house if I manage to sell mine within this timeframe."

How Does it Work for Sellers?

For sellers, this clause might sound a bit risky at first glance. You're essentially agreeing to take your property off the market temporarily, banking on the buyer's ability to sell their home. The silver lining? The kickout clause. This part of the agreement gives you the right to "kick out" the buyer if you receive another offer that you're willing to accept. The original buyer typically has a set number of hours (often 48 to 72) to remove the Hubbard clause by proving they can proceed without selling their property or to back out of the deal, freeing you to accept the new offer.

Advantages and Considerations

For Sellers:

  • Advantage: You can continue showing your property and accepting offers, which puts less pressure on you to wait indefinitely for the buyer to sell their home.
  • Consideration: There's a risk that the initial deal might fall through if the buyer can't sell their property in time. However, this risk is mitigated by the kickout clause, allowing you to pivot to another offer if needed.

For Buyers:

  • Advantage: It provides a safety net, allowing you to commit to a new property without having sold your current one. This can be particularly useful in a buyer's market, where selling your home might take a bit longer.
  • Consideration: The pressure is on to sell your current home within the stipulated timeframe, or you risk losing the new property to another buyer. It's crucial to realistically assess the marketability of your property before entering into such an agreement.

The Bottom Line

The Hubbard or kickout clause is a fascinating example of the flexibility in real estate transactions. It's designed to balance the interests of buyers and sellers in situations where transactions are contingent upon another sale. Like any contract provision, it's essential to understand the terms fully and consider how they align with your circumstances and goals.

If you're navigating these waters, whether in Fryeburg, Maine, North Conway, New Hampshire, or anywhere else, remember that knowledge is power. Understanding clauses like these can empower you to make informed decisions, ensuring your real estate journey is as smooth as possible.

So, whether you're looking to buy a new family home or sell one to the next eager homeowner, keep the Hubbard clause in your arsenal of real estate knowledge. It just might make the difference in your next property transaction.

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