Working Twice as hard on Bidding War Night
From time to time, particularly in heated real estate markets it may be wise to draft a revocable Offer, that is, one which may be withdrawn prior to acceptance.
A better deal may come along!
Consider Bob the Buyer, who wishes to submit Offers on both 123 Main Street and 456 Yonge Street on the same evening. The first property is holding presentations at 7:00 pm and the second is starting at 9:00 pm.
Bob wants to submit Offers on both properties. Bob’s preference would be the first property. If he wins, and he certainly hopes that he does, he doesn’t want to have an Offer for the second property which could be accepted. Documents are prepared. The first Offer follows the regular format, but some changes will be required for the second Offer.
Offer on Second property
There are several issues which must be addressed:
- Offer time period,
- Irrevocability of Offer, and
- The “seal”.
So, this should be simple enough.
Offer Time Period
Restrict the Offer time period for acceptance. You could delay the commencement of the “acceptance time”. It doesn’t have to begin when it’s delivered. It could be open “after 9:00 pm”. This way, you should have the result from the first Offer earlier in the evening.
In addition, the acceptance period might be restricted to “commencing at 9:00 pm and ending at 10:59 pm”. This would leave 2 hours open. The reason for the “cap” here, is to allow Bob to continue bidding for the first property later in the evening should he still be in the running.
This needs to change. Bob would be vulnerable to an acceptance of his Offer on the second property from “9:00 pm to 10:59 pm”. So, change that. Make sure the Offer specifically states:
“This Offer may be revoked by the Buyer at any time prior to communication of acceptance by the Seller. Revocation may be communicated by written document delivered to the Listing agent, or by text or email directed to the attention of the Listing agent”.
Additionally, while this clause will appear in Schedule “A” to the agreement, there should also be a reference to this clause appearing on page 1, where the time period for acceptance is stated. For example, include “See Schedule A” plus the Buyer’s initials. That should be sufficient to draw the Seller’s attention to the change.
Remove it. The seal is included to ensure that there is a contract even where there is no consideration. Leaving it in would be confusing, and possibly fatal.
Also, state quite simply in Schedule “A”:
“This document is not executed under seal”.
It would also be wise to place an “X” over the seals that appear on the preprinted form. The deletion should be initialled.
A few simple steps and you are good to go with two Offers on one night, without the risk of being stuck with winning twice.
Brian Madigan LL.B., Broker