When is the back-up contract’s effective date?

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12/12/2014 | Author: Editorial Staff

My client wants to submit an offer for a property that’s already under contract using the Addendum for Back-up Contract. How do we determine the contract’s effective date?

The effective date for purposes of depositing earnest money and paying any termination option fee is the date of final acceptance. This is the date that the last party to sign the back-up contract communicates acceptance back to the other party or the other party’s agent, if applicable.

The effective date for all other performance under the contract is the “Amended Effective Date,” which is the date the seller notifies the back-up buyer that the first contract is terminated and the back-up contract becomes the primary contract.

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Categories: Forms, Legal
Tags: contracts, effective date, legal, legal faq


Judith on 06/02/2015

This makes no sense at all.  Can someone please email me a CLEAR explanation.  On a back up offer, executed, do we deliver the earnest money and option fee as if we were the first buyer?  This makes very little sense because you are paying money BEFORE you are even in the running.

jesse cortez on 01/17/2015

well, that was clear as mud. guess ill continue to make my own rules as every other agent

Janice Smith on 12/18/2014

I believe the option time starts the date the backup buyer has the contract.  He should nowg
Start his inspection now that he has the
Contract.  If he did inspections an the first buyer
Is sticking with his contract.  Backup buyer will
Have lost a lot of money.

Tinsley Alexander on 12/18/2014

The buyers option period BEGINS at the effective date,  AND continues through the Amended effective date.  In other words- buyer can terminate anytime from the effective date- and until midnight on the day of the option period of the Amended effective date.  Example:  Let’s say the effective date is: 12/18/2014, and the option period is 10 days on the contract;  On 12/20/2014- your client comes into first position because the other contract terminated and you were notified.  You client will have had a total of 12 days to terminate.  2 days under the effective date, and 10 days under the Amended effective date.  Hope this helps.

Here is what the addendum states:

If Buyer has the unrestricted right to terminate the Back-Up Contract, the time for giving notice of termination begins on the effective date of the Back-Up Contract, continues after the Amended Effective Date and ends upon the expiration of Buyer’s unrestricted right to terminate the Back-Up Contract

Peter Boesel on 12/18/2014

Barbara - not quite.  Pargraph D of the Addendum for Backup indicates that the Buyer’s right to terminate begins as soon as the Backup is accepted, but further, that the buyers right to terminate extends to that date as provided in the backup contract - thus giving buyer the time to do their own inspections etc.

Barbara Gremillion on 12/13/2014

So if the termination option is tied to the first effective date, the buyer must get their inspections during the back-up period?  I always thought the option period wouldn’t begin until the amended effective date.

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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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