Humber/Ontario Real Estate Course 2 Exam Practice

Which is an accurate description of an escape clause in real estate transactions?

1. Allows the seller to continue marketing while accepting a contingent offer.

2. Allows buyers to back out if their home doesn't sell.

3. It minimally affects the marketing process.

4. It is more prevalent in sellers' markets.

5. Should be avoided in buyers' markets.

6. Ensures the seller's property must stop being marketed.

The correct answer is: Allows the seller to continue marketing while accepting a contingent offer.

An escape clause in a real estate transaction allows the seller to continue marketing their property even after accepting a contingent offer. This clause provides flexibility to the seller by giving them the option to accept a better offer if one comes along. It is important for sellers to have the ability to consider more favorable offers, especially in a competitive market where multiple offers may be received. This clause does not restrict the seller's ability to seek better opportunities, making it a valuable tool in real estate transactions. Option B is incorrect because that scenario would typically involve a sale of buyer's property contingency, not an escape clause. Option C is incorrect because an escape clause can have a significant impact on the marketing process, as it allows the property to remain on the market. Option D is incorrect because the prevalence of an escape clause is not determined by whether it is a sellers' market or buyers' market. Option E is incorrect because escape clauses can be beneficial in any market condition, depending on the specific circumstances of the transaction. Option F is incorrect because an escape clause, as explained, allows the property to continue being marketed even after accepting a contingent offer.