7 Questions About the Hubbard Clause Answered

February 18th, 2008 categories: Home Buyers, Home Sellers

The Hubbard Clause, or Sale of Buyer’s Property Contingency, is a clause in the real estate purchase contract that protects the buyer who must sell their home from having to buy their next home before selling their current home.

In Central Connecticut, we utilize a addendum to the real estate contract called the “Sale of Buyer’s Property Contingency.”

In the addendum, the buyer and seller agree to the following:

That the buyer will immediately list their house for sale, if they haven’t already done so.

The buyer has a certain period of time to obtain a contract on their home and for all the contingencies in that contract to be met - mortgage, inspection, etc.

If another buyer puts in an offer on the seller’s house, how many days the buyer has to remove the Sale of Buyer’s Property Contingency (by either having the contingencies met in their contract or by obtaining a 2nd mortgage).

Whether the seller may accept another contract with another Sale of Buyer’s Property Contingency.

Confused? Don’t worry - you’re not alone. Here are some common questions and answers regarding the Hubbard Clause.

Sellers

Why should I accept a contract with a Hubbard?

If you have no other options, if you are confident the buyers will be able to sell their house in a reasonable time, and if you don’t mind waiting.

Can I show my house while it is under a Hubbard?

Absolutely. In fact, you should. You may be able to find another buyer who does not have another house to sell.

Will other buyers want to see my house if they know it’s already under contract?

That is the big question. And the answer depends on the agents and their buyers’ instructions. Personally, I show properties that are under a Hubbard but I know some other agents think it’s a waste of time.

What happens if my buyers don’t sell their house?

As long as your contract gives a time deadline and the buyers don’t have a contract with all contingencies met, then you can renegotiate or decide not to give the buyers any more time. If the buyers have well-priced their home and are making all attempts to sell it, then I think giving them extra time is warranted. If their house is overpriced and they haven’t had too many showings, then it’s time for some tough love.

Buyers

Why should I bother seeing homes with a Hubbard clause?

Homes with a Hubbard may be slightly less “available” in that when you submit an offer on the home, there is another buyer who has 72 hours, for example, to release their contingency on the property (by obtaining a mortgage or having a contract). If they can’t do so, the sellers can then negotiate with you. If you like the house, I think it’s worth the wait.

Can the seller accept another offer even if it’s below my offer?

In the standard Sale of Buyer’s Property Contingency form, there is no space for price. So, the answer is, yes. A seller may determine that a lower priced offer may be better than yours if it has fewer contingencies.