What is a Hubbard Clause?

by | Dec 17, 2019 | Common Real Estate Questions | 0 comments

After casually searching online for homes, you found one you can’t ignore. 

You thought that now wasn’t the right time to buy, but this house checks all the boxes. 

Is it worth looking at this new house when yours isn’t listed for sale?

Many homeowners face a time when they need to sell one house to purchase another. Whether you unexpectedly find your dream home, relocate, or are ready to upsize or downsize, this is a common scenario in real estate. In these instances, a Hubbard clause is needed. 

What is a Hubbard Clause?

A Hubbard clause is one of the common contingencies in a real estate transaction. The clause is added to the purchase and sale agreement that is signed when a house goes under contract. A Hubbard clause states that the buyer must sell and close on an existing piece of real estate to buy the home for sale. 

Key Information in a Hubbard Clause

Whether you are the buyer or the seller, it is essential to understand the conditions of the Hubbard clause before signing the purchase and sale agreement. 

  • Contingency Date. The first piece of information to look for is the contingency date. A Hubbard clause does not mean the buyer has an indefinite amount of time to sell their current home. The buyer must have a contract on their home within a specific time frame (i.e., 60 days). This protects the buyer, as they would be able to walk away from the deal without repercussions if unable to sell their home.
  • Right to Show. If a buyer adds a Hubbard clause to the contract, the seller has the right to continue to market and show their property. This protects the seller because they do not have to take their house off the MLS. 
  • Contingency Removal Period. If another buyer makes an offer, the sellers must give the first buyers an opportunity to release the Hubbard clause and move forward with the deal. The contingency removal period is usually between 1-3 days.

Options for Proceeding

If the allotted time passes, or another buyer makes an offer, the buyers with the original contract have three options. 

  • Remove the clause. The buyers can remove the Hubbard clause and move forward with the purchase of the sale. This can only be done if they can financially own the new property along with the current property. 
  • Request an extension. If no other offers coming in, the seller may agree to extend the clause to provide more time for the buyers to sell their home.
  • Withdraw the offer. If conditions of the Hubbard clause are not met, the buyer can walk away from the deal without any repercussions. 

You never know when you might stumble upon your dream home. If you do so before you sell your existing house, you can discuss adding a Hubbard clause to the contract with your Realtor. 

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