Cash out clause if you are buying

[williamfieldman]

First encounter with a cash out clause when buying.

If before this Agreement becomes unconditional the Vendor enters into another agreement which is either conditional, or is or has since become unconditional in all respect except for any condition relating to the expiry or termination of this Agreement, and which is otherwise on terms and conditions acceptable to the Vendor, the Vendor may serve on the Purchaser or the Purchaser's solicitor notice in writing requiring the Purchaser to confirm this Agreement as being unconditional. The Purchaser shall have until 4.00pm on the 3rd working day after service of such notice to declare this Agreement unconditional by notice to the Vendor or the Vendor's solicitor, otherwise this agreement shall terminate, the deposit paid (if any) will be refunded to the Purchaser and neither party will have any claim against the other. The condition is for the sole benefit of the Vendor.

This seems rather one-sided in favour of the seller.It doesn't say it has to be a higher offer. Can the seller pull a scam by serving notice to the buyer even though there is really no other offer?

What would be a fairer version if you don't want to walk away?

[Keithw]

In the end it is up to the vendor to choose whether they want to sell to you or not- in most cases you cant make them.
If they get a better offer than yours - on whatever terms- before yours is unconditional, then they give you the chance to go unconditional or walk away.
Whats unfair about that ?

Don't really see it would be a "Scam" if they made up a bogus alternative offer in order to get out of your deal, eg if they changed their mind - You havent committed to it, & they risk not finding another buyer.
Would it be a scam if it was simply a ploy to get you to go unconditional - maybe, but you have the choice - you can walk away

[Orkibi]

Can the seller pull a scam by serving notice to the buyer even though there is really no other offer?

NO legally he cannot - BUT dishonest vendor who work without solicitor until unconditional could do that.

Basically if you have a "Cash out" or "Better Offer Clause" in the agreemnet there is not alot you can do. -- I refuse to buy or start DD with Cash out clauses.(in most cases)

What you can do is negotiate a 7 days instead of 3 days to confirm once the Clause is triggered.

[TheLiberalLeft]

I hate that clause. As a seller I'll only entertain adding it (even though it's in my interest) if the buyer is one of those smart alec investor types who thinks that they can purchase without paying any form of deposit.

If a deposit is made and the dates aren't unreasonable, I'm happy to live without it.

As a buyer, if the dates are reasonable and I pay a deposit (something I don't object to normally) then I don't expect to see this clause and will argue the toss. If they don't remove it, I walk away.

[ChrisD]

When we put an offer on a to-be PPOR last year (conditional on LIM) the purchaser tried to insert a clause like this. We told the agent in no uncertain terms that we wouldn't entertain entering an agreement conditional with a cash-out clause unless the clause was for 10 working days AND the vendor agreed to stump up for an expedited LIM. Needless to say, the vendor agreed not to insert the clause.

As an aside, ordering the LIM on that property was the best decision we ever made - we didn't proceed with the offer, and the property remains unsold more than 8 months later.

[Bluekiwi]

Its needed when your first buyer has to sell their house and you have no idea or not whether they can sell it.