As a Chicago real estate attorney, this is a common question I get from both buyers and sellers. If you’re in the process of buying or selling a home in Illinois, you may be wondering, “What happens if the seller gets another offer while your deal is still contingent?”
Can a seller accept another offer while contingent?
Yes, depending on the specifics of the contract, a seller can accept another offer while it is contingent. This comes into play particularly if there’s a kick-out clause allowing the seller to continue marketing the home. The buyer often has a right of first refusal and may need to remove contingencies within a stipulated time; failing which might cause forfeiture of earnest money deposit.
Let’s break it down:
1. What Does “Contingent” Mean in a Chicago Real Estate Deal?
When a Chicago real estate deal is “contingent,” it means one or more conditions need to be met for the contract to become binding. The word “contingent” means ‘depending on certain circumstances’.
Common real estate contingencies include:
- Mortgage Financing Contingency
- The buyer needs to secure financing to purchase the home.
- Home Inspection Contingency
- The buyer can inspect the home and may terminate if issues are found.
- Home Appraisal Contingency
- The buyer can back out if the appraisal value is lower than the original sale price.
- Sale of Buyer’s Current Home
- The contract is contingent on the buyer first selling their property.
Until these contingencies are removed, the buyer or seller may still terminate the contract under certain conditions.
2. When can the seller Accept Another Offer While Contingent?
If the real estate deal is contingent, the short answer is yes, the seller can accept another offer. However, it depends on the specifics of the contingency:
- Kick-Out Clause
- If the contingency contains a “kick-out clause,” the seller can continue to market the home and accept other offers during the contingency period.
- No Kick-Out Clause
- If the contingency contains a “no kick-out clause,” the seller cannot accept another offer unless the original buyer doesn’t satisfy contingencies.
- Right of First Refusal
- Most contingencies require the seller to allow the original buyer to remove contingencies and proceed once a new offer comes in. The original buyer often has a set period of time to remove contingencies when notified of a new offer.
- Earnest Money
- If the original buyer removes contingencies but doesn’t complete their purchase, they may forfeit the earnest money deposit.
- Potential Litigation
- Accepting a new offer while the original contract is contingent could lead to legal disputes. Proceed with caution and consult a real estate attorney.
Buyers and sellers in Illinois should understand their contractual rights before a contingent real estate contract. A real estate lawyer can help craft an agreement addressing these scenarios.
3. Interpreting Contingent Listings
When you see a Chicago property listed as contingent, it’s not always straightforward. Here are some common contingent designations:
- Contingent – Continue To Show (CCS)
- The seller has accepted an offer but wants to see other less contingent offers. The current offer may fall through.
- Contingent – No Show
- A solid offer that will likely make it to closing. The seller no longer wants to show the property.
- Contingent – With Kick-Out
- The seller can accept a different offer and “kick out” the current buyer.
- Contingent – With No Kick-Out
- The seller cannot accept another offer unless the current buyer doesn’t satisfy contingencies.
- Short Sale Contingent
- A short sale with at least one offer, but the agent lists it to get backup offers.
- Contingent Probate
- The property is being sold through probate court after an owner’s death. Other offers may be futile.
4. Active Contingent vs. Pending
- Active Contingent – An offer is accepted but contingencies haven’t been met yet, usually home inspection and mortgage financing.
- Pending – All documentation is completed and the sale is proceeding. Some variations:
- Pending – taking backup offers – The seller may accept backup offers if issues arise.
- Pending – short sale – Waiting for lender’s approval.
- Pending – more than 4 months – Current deal is pending for more than 4 months, referring to longer processing times.
The contingency process adds complexity to some real estate deals. But contingencies allow buyers to conduct due diligence before finalizing a deal.
Learn more about what is the real estate attorney review period and what happens during that time.
If you have questions about contingencies in a Chicago real estate contract, contact Adler & Herbach real estate attorneys for guidance.
