In Florida’s fast-paced real estate market, properties often receive multiple competitive offers. For this reason, Realtors® must be well-versed in the tools available to handle competing buyers while protecting their clients’ best interests. Two such tools available in the Florida Realtors/Florida Bar (FR/BAR) forms are the Back-up Contract Rider (Rider W) and the Kick-Out Clause Rider (Rider X). When used correctly, these riders can offer strategic advantages to both buyers and sellers.
Back-up Contract Rider (Rider W)
The Back-up Contract Rider allows a seller to accept an offer from a secondary buyer while the primary contract remains in effect. This means the back-up contract is contingent upon the failure (cancellation, default, or other termination) of the primary contract. The “Effective Date” of the back-up contract becomes active only if and when the seller notifies the back-up buyer that the primary contract is no longer in effect. There is a blank line to fill in a deadline for the seller to provide notice of termination of the primary contract. If the seller does not provide such notice, the back-up contract automatically terminates. It should also be noted that the buyer in the back-up position may withdraw the back-up offer at any time prior to the seller providing notice of termination of the primary contract.
Kick-Out Clause Rider (Rider X)
The Kick-Out Clause Rider can be used with contracts that have buyer contingencies when the seller is expecting additional offers. It allows the seller to continue marketing the property and provides a mechanism to potentially “kick out” the primary contract buyer if a better offer comes along. If the seller accepts a back-up contract, the seller must provide written notice to the buyer. The buyer in the primary contract then has three (3) days from receipt of such notice to make an additional deposit in the amount specified in the rider and waive all contingencies (including the inspection period, financing, and sale of the buyer’s property, etc.) contained in the primary contract. If the buyer makes the additional deposit, the contingencies are deemed waived, the primary contract remains in place, and the back-up offer does not become effective. If the buyer does not make the additional deposit, the primary contract will terminate, with the deposit being refunded to the buyer and the parties released from any further obligations under the primary contract. This allows the seller to then proceed with the back-up contract.
When to Use Each Rider
Use the Back-up Contract Rider when representing a seller who wants to secure a back-up buyer, or when representing a buyer who wants to secure a second position in case the primary contract falls through.
Use the Kick-Out Clause Rider when your seller is entertaining an offer that includes a home sale or other contingencies, but wants the flexibility to accept additional offers later.
Legal Pitfalls to Watch For
Realtors® must exercise caution in drafting and timing these clauses:
- Ambiguity in timing or failure to properly document notice can lead to issues with enforceability. Ensure your client provides timely notice where applicable.
- Miscommunications about what constitutes “termination” of the primary contract can open the door to lawsuits.
- Sellers and buyers alike should consult with a Florida real estate attorney before agreeing to or acting on these riders, especially when multiple offers are involved.
Final Thoughts
Both the Back-up Contract and Kick-Out Clause Riders are powerful tools for navigating multiple-offer scenarios and contingency-based deals. However, they must be used carefully, with clear communication and written documentation at every stage. A Realtor® understanding how and when to use these riders not only helps protect their client, but it also elevates their value as a professional in the transaction. If you or your clients have questions about the legal impact of these riders, or if a deal starts to go sideways, don’t hesitate to contact your trusted Florida real estate attorney early. Prevention is almost always cheaper and less stressful than a cure.
