Humber/Ontario Real Estate Course 3 Exam Practice

What does an escape clause allow a seller to do?

1. Accept a buyer's offer conditional on selling the buyer's home

2. Cancel the agreement if financing is not obtained

3. Pause marketing the property

4. Term out the property before market conditions worsen

5. Enhance offer negotiations with other buyers

6. Reduce the sale price if needed

The correct answer is: Accept a buyer's offer conditional on selling the buyer's home

An escape clause is a provision in a real estate contract that allows a seller to accept a buyer's offer while still retaining the option to consider other offers, particularly when the acceptance is conditional upon the buyer selling their own property. This mechanism gives the seller flexibility and the assurance that the transaction can proceed if the buyer’s home sells within a specified time period. If the buyer is unable to sell their home within the agreed timeframe, the seller retains the right to cancel the agreement and pursue other buyers, thus protecting the seller’s interests. In contrast, other options deal with different scenarios that do not align with the specific function of an escape clause. For example, canceling an agreement if financing is not obtained relates more to financing conditions or contingencies, while pausing marketing the property implies a temporary hold rather than an open option to continue negotiations. Similarly, enhancing negotiations or adjusting the sale price doesn't align with the principle of the escape clause, which is fundamentally about securing a position while allowing for contingencies related to the buyer’s home sale.