Sometimes conditional offers have within their conditions an ‘escape clause’. An escape clause is commonly found when there are conditions within an offer that will take longer than the typical 7-10 day time frame for the Buyer to meet. A good example of this type of situation would be an offer conditional on the sale of the Buyer’s home.
What exactly is an escape clause? An escape clause means that another prospective buyer can put an offer in on the subject property and if it is accepted by the Seller (conditional on release from the first offer) the party with the first offer will have a specified time frame to either firm up their end of the conditions or they will be released and the second offer will come into play.
How long are escape clauses, typically? In our market place here in Thunder Bay, escape clauses typically range from 24 to 72 hours. If you are representing the Buyer, you try hard to negotiate 72 hours, however, an Agent representing the Sellers will try hard to get that down to 24 hours. It is very hard for a Buyer with a house to sell to firm up their conditions with 24 hours notice- it would depend on where they are at in the selling process.
A note about wording: some escape clauses are worded such that all of the conditions must be dropped within the specified time frame. Others are worded such that only the ‘problematic’ condition must be dropped. Be aware of this one because if the other conditions have a lengthier timeline to match for instance the sale of the buyers home, a seller would be bound to that date, which basically renders the escape clause ineffectual.
In summary, escape clauses are common in offers with longer conditions, and are not often found in offers with shorter conditions- your typical financing, insurance and home inspection types of offers. If you are interested in a home that has an accepted conditional offer on it, you should ask if there is an escape clause. Agents should also be asking fellow agents the same question when attempting to book viewings, if the offer isn’t already posted to our system. It is sometimes amazing the information that isn’t given if the question isn’t specifically asked. And, Sellers should take particular note of the wording and length of escape clauses in order to best protect their interests.