Can the Back-Up Contract Addendum be used to create more than one back-up contract?
QUESTION: One of my listings is under contract, and today I received two back-up offers. Each of the back-up offers has the Back-Up Contract Addendum (Form 2A1-T) attached. Should my client sign both back-up offers and decide later which buyer to proceed with if the Primary Contract terminates?
ANSWER: No. When an offer containing a Back-Up Contract Addendum is signed and acceptance is communicated to the buyer or the buyer’s agent, a binding contract is formed. Form 2A1-T provides that if “the Primary Contract is terminated, Seller shall promptly provide Buyer the following two items: (a) written notice stating that [the] Back-up Contract has become primary; and (b) written evidence that the Primary Contract has been terminated as provided in paragraph 2[.]” If your seller signs both back-up offers as they are, they would be compelled to follow this mandatory language with each back-up buyer if the Primary Contract is terminated. This would result in the seller’s being under contract with two buyers for one property at the same time.
Form 2A1-T is only designed for one back-up contract. Your client should choose one back-up offer to accept. If they wish for the runner-up to become a second back-up contract, the seller should use an attorney-drafted addendum that makes it clear when Notice of Primary Status will be provided to the second back-up buyer.
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