Apr 05, 2008
Acceptance provisions in purchase agreements
05 Apr 2008
Posted by VAR
VAR Standard Forms are expertly crafted and time-tested to best serve REALTOR® needs throughout the Commonwealth. They are protection for your business. Beginning with this issue, we’ve asked our special counsel Lem Marshall to regularly take a close-up look at specific portions of VAR’s Standard Forms.
Acceptance provisions in purchase agreements can cause more angst than warranted, so it’s worth a moment to remind ourselves of a few important things. When a buyer wants to goad a seller to prompt action on an offer, he will sometimes include a provision such as that found in the VAR Form 600 purchase contract:
“This…offer shall remain in effect unless earlier withdrawn until ______. If not accepted by such time, this offer shall be null and void.” The first point to note is that this provision does not obligate the offeror (typically, the buyer) to keep the offer open until the stated date and time. Any offer may be withdrawn at any time until it is accepted. Second, if the stated date and time arrive with no acceptance having occurred, the offeree has nothing to accept, and the offeror who wants to keep the deal open will need to reauthorize the offer, usually by changing the effective date and time or re-executing the contract.
In some parts of the state it’s becoming common for buyers to add, after acceptance language like that set out above, the words “at the option of the buyer.” I guess this means that the offer dies at a certain time and date if the buyer decides it does. But how does the buyer manifest this intent? How does seller know if the offer is still there to accept? Nothing but confusion and ambiguity can arise from such language, and I hope brokers will educate their agents about the danger of such provisions, and that listing agents will be alert to such silliness. Acceptance provisions can be useful, but we need to remember that once the time comes and goes without acceptance, complications can arise. Unless you’re sure about how to use them, it might be best to leave the offer open.