The Best of the Legal Hotline: Bump Notices and the Closing of Buyer’s Property Contingency Revisited


 Tracy Rucka  |    January 31, 2022
Legal Hotline

When considering the Bump Clause, the lyrics of the “Hokey Pokey” may come to mind: You put the clause in and put the clause out, you put the clause in and then you take the clause back out. Over the years, the Bump Clause has been a part of the Closing of Buyer’s Property Contingency and separated from the Closing of Buyer’s Property Contingency, depending on the versions of the state-approved offers. 

Bump Clause in the 2020 WB-11 

What is unique about the latest version of the Bump Clause? 

The Bump Clause is now a separate check box item in the 2020 version of the WB-11 Residential Offer to Purchase, and it has that “spread out” formatting with lists of numbered items and bullet points to enhance user understanding. One of the other advantages of the latest clause is that the default amount of time for responding to a bump notice is 72 hours
In terms of what a buyer must deliver to the seller to avoid being bumped, the provision gives a numbered list:

  • Item (1) at line 338 states a written waiver of the Closing of Buyer’s Property Contingency must be delivered to the seller if the box on line 328 has been checked, making the Closing of Buyer’s Property Contingency a part of the offer.
  • Item (2) gives the opportunity to make other provisions in the offer subject to the bump clause. A waiver of any contingencies written in the blank at lines 339-340 must also be delivered. If “N/A,” a dash (—) or nothing is written in, then the second item does not apply and may be disregarded.
  • Item (3) on lines 341-346 lists other items, if any, the buyer must deliver to avoid being bumped. There are check boxes for a bridge loan and for third-party reasonable written verification of funds, and a blank to write in other requirements where it says “Other.” For instance, additional earnest money might be written on the other line.

If the seller wants to require the buyer to deliver a copy of an accepted offer on the buyer’s home as something that the buyer must deliver to avoid being bumped, it may be written in at lines 345-346.

Thus, there is a clear list of the items a buyer must deliver to the seller if the seller issues a bump notice.

The agent received a counter-offer adding a bump clause, but there is not a home sale contingency in the offer. Can this be done?

Yes. This is one of the reasons the Bump Clause is now a separate check box item in the 2020 version of the WB-11. Even if there is no Closing of Buyer’s Property Contingency, the seller may want the opportunity to bump the buyer in the event the seller accepts another bona fide offer. The buyer and seller may negotiate for what the buyer must deliver to the seller to avoid being bumped. The clause gives three opportunities for contingencies to be waived or additional information or items that must be provided. The language states item 1 does not apply if there is no Closing of Buyer’s Property Contingency used in the offer.  

If there are contingencies in the primary buyer’s offer, the buyer may be required to deliver written waiver of any contingencies written in the blank lines in item 2 at lines 339-340. The buyer also must deliver whatever is provided in item 3 to avoid being bumped. For example, there are check boxes for a bridge loan and for third-party reasonable written verification of funds, and a blank to write in other requirements where is says “Other.” Negotiation between the buyer and seller will determine whether to include a bump, what the buyer will waive per item 2, or which documents the buyer will provide per item 3.  

Proof of funds   

The residential offer included a Bump Clause, and the buyer checked the box at line 343. The buyer has just received a bump notice from the seller stating there is a bona fide secondary offer. Can the buyer provide a loan commitment? In this context, what does the buyer need to provide as “proof of funds?”    

What is necessary to be proper proof of funds can be broken down into a few distinct elements based on the contractual requirements. Lines 343-344 state:

Proof of ability to close from a financial institution or third party in control of Buyer’s funds which shall provide Seller with reasonable written verification that Buyer has, at the time of verification, sufficient funds to close. 

First is the party who can provide the documentation: either a financial institution or third party. Second, the financial institution or third party is to be in control of the buyer’s funds at the time of verification. In addition, the verification must indicate the buyer has enough funds to close the transaction at the time of the verification. 

Unilateral waiver   

A seller accepted an offer with the Closing of Buyer’s Property Contingency checked and the Bump Clause checked. The buyers accepted an offer on their property and sent over a notice waiving the Bump Clause. Should the offer be amended so both parties agree to remove the bump clause as opposed to the buyer unilaterally removing it? 

Although a buyer may waive the Closing of Buyer’s Property Contingency in response to receiving a bump notice from a seller, the buyer may not unilaterally waive the Bump Clause. The Bump Clause in a buyer’s offer is not triggered unless or until the seller accepts a bona fide secondary offer and issues the written notice to the buyer. 

Additional conditions  

The agent is presenting an offer to the seller. The Bump Clause is checked, but nothing is entered in the blank lines, and none of the boxes are checked. Can the sellers counter because they want additional assurances if the buyer is bumped, they will have a successful transaction?

Yes, the seller can counter the offer. When there is a Closing of Buyer’s Property Contingency and the Bump Clause is checked, the buyer is required to provide written waiver of the Closing of Buyer’s Property Contingency. If the seller wants other conditions, the Bump Clause can be negotiated to include additional conditions for the seller’s benefit, such as payment of additional earnest money, waiver of other contingencies in the offer and/or additional financial assurances. 

Delivery or receipt?     

The buyer and the seller have an offer to purchase with a 72-hour Bump Clause. The offer form of delivery is email. The seller accepted a secondary offer with no contingencies. The agent delivered notice via email at 6:34 p.m. on September 12 to the first buyer’s agent to remove the Bump Clause. When is the actual 72 hours up? Does the agent need the first buyers to initial the notice as to the time and date of receipt? The first buyers are unable to remove the Bump Clause per their agent. 

Although many time provisions in the offer to purchase are triggered when a document or notice is delivered, the 72 hours for the bump notice begins upon actual receipt of the notice by the primary buyer. Regardless of when the notice was delivered, actual receipt does not occur until the primary buyer has actual physical possession of the written notice. Neither the buyer nor the cooperating broker should take action to delay the actual receipt by the buyer. 

“Actual Receipt” means that a Party, not the Party’s recipient for delivery, if any, has the document or written notice physically in the Party’s possession, regardless of the method of delivery. If the document or written notice is electronically delivered, Actual Receipt shall occur when the Party opens the electronic transmission. 

Lines 42-44 of the WB-41 Notice Relating to Offer to Purchase allow a buyer to document when actual receipt occurs. Although the buyer is not required to return the notice with these lines completed, it allows for the time of actual receipt to be recorded.

Tracy Rucka is Director of Professional Standards and Practices for the WRA. 

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