Offer to purchase: the 72-hour clause explained
Last updated on May 14, 2024
Quite often, buyers have to sell their property in order to buy another one. To this end, their offer to purchase might be conditional on the sale of their property. The 72-hour clause allows sellers to accept offers that include such a condition while keeping the door open to other buyers.
Contents :
- Is there a difference between an offer to purchase and a promise to purchase?
- What are the stages of an offer to purchase?
Is there a difference between an offer to purchase and a promise to purchase?
From the point of view of the parties' intentions and legal effects, the offer to purchase and the promise to buy define the same thing: the offer or promise signed by the buying party is a unilateral contract (which provides for obligations only for him), the offer or promise accepted by the selling party becomes a bilateral contract (which provides for obligations for both parties).
What are the stages of an offer to purchase?
- Place an ad indicating willingness to sell
- Manifestation on the part of a buyer to make a promise to purchase
- Reception by the selling party of the promise to purchase
- Response by the selling party within the time limit specified in the promise to purchase (refusal, acceptance or counter-offer)
- Following acceptance of the promise to purchase by the selling party, fulfillment of conditions by the buying party
- Once the conditions have been fulfilled by the purchasing party, the property is considered sold
- Notary visit to sign the deed of sale
What is a conditional offer in real estate?
Often, when a buyer already owns a home and wants to buy a new one, he or she will make a conditional offer to purchase (C.O.P.) on the sale of his or her property. As long as the conditions of this offer to purchase have not been fulfilled, you can continue to look for a new buyer, thanks to the 72-hour clause.
“So, while the buyer is trying to sell their property within the timeframe given in the offer to purchase, the seller can receive and even accept a second offer to purchase,” explains Elena Maria Bejan, a notary with DuProprio. “The recommended amount of time to allow the buyer to sell their existing property is usually between 60 and 90 days, but the parties can absolutely agree on a shorter or longer timeframe, depending on the particulars of the situation.”
A 2nd offer to purchase is submitted
When the selling party receives a second offer and the first offer, which has been accepted, is conditional on the sale of the property by the first buyer, the 72-hour clause applies if it was included in the offer to purchase. If there is no condition of sale, the second offer may be accepted by the seller and will be conditional on the cancellation of the first offer already accepted. In this situation, the second buyer waits for the seller to notify him or her of the cancellation or maintenance of the first offer, within the timeframe specified in the offer to purchase.
In short, the selling party has the right to accept several offers, but concurrently, not simultaneously. Each offer is conditional on the cancellation of the previous offer. The parameters must be clearly defined in each offer to purchase.
Is it possible for the seller to choose another offer to purchase?
When a new buyer submits an offer to purchase the same property, this second offer is independent of the first. However, it must be conditional on the cancellation of the first offer.
Sending the 72-hour notice
This notice will be sent to the first buyer by any means that provides proof of receipt, e.g. in person (thus obtaining the buyer's signature with the precise time and date), by bailiff or by telegram. From the moment it receives this notice, the buying party has 72 consecutive hours to inform the selling party in writing of its decision.
The first-time buyer has two options:
- Cancel all outstanding conditions of the offer to purchase, including the condition of sale of the property. He or she must then demonstrate that he or she has the necessary financing or funds to purchase;
- Cancel the offer to purchase.
If the buyer does not notify the seller of his decision within 72 hours, his offer to purchase becomes null and void.
Closing the transaction
Regardless of which of the two offers you end up accepting, we recommend that you fill out Section 3 of the form Amendments and Notice of Fulfilment of Conditions . It will officialise the offer to purchase before you go meet the notary.
