Before it has been accepted, there are four scenarios in which an offer would lapse.
On a standard offer to purchase document, there is normally a blank section where the prospective buyer can state how long they are prepared to leave the offer on the table. The seller will have until the specified date to accept the offer that the buyer has presented, after which it will lapse. However, there are instances where no date has been specified. In these cases, the offer will lapse after what is deemed to be a ‘reasonable period’. What is considered to be reasonable will depend on the circumstances of each party within the agreement. Ambiguity could cause conflict down the line, so it is best to have a clear date specified in the document.
Once an offer to purchase is signed by the seller, it immediately becomes a legally binding sales agreement. However, before the seller accepts the offer, it can be revoked by the buyer, provided it has not been stated that the offer is ‘irrevocable’ for a certain period and it must be brought to the seller’s attention within that time frame.
The offer ceases to exist with immediate effect if the seller rejects it. The seller will not be able to go back on their decision and accept the offer once they have rejected it. If the seller counters the buyer’s offer, it is considered to be a rejection of the buyer’s original offer. If the seller crosses out the amount the buyer has written in the offer and writes in a higher amount and initials the change – it is considered a counter offer. If the buyer decides that the amount is too high and does not accept the counter offer, the offer lapses. The seller will not then be able to accept the buyer’s previous offer – a new agreement will have to be drawn up.
If the buyer or seller dies before the offer has been accepted, it will automatically lapse. However, in the instance where the offer has been signed and accepted, all rights and duties arising from the contract will be passed to the deceased estate.
