Kick-out Clause Law and Legal Definition

This term refers to a provision in sales/real estate contract. Such a clause allows a seller to void the agreement if a better offer is received before the sale is closed. This is seen mostly in real estate contracts. Usually in a real estate contract there is a contingency clause which permits a buyer to enter into a contract for purchase of a house with the understanding that the he/she must sell his/her current house before finalizing the new purchase. In such situations, the seller inserts a kick out clause and continues to market the home. If the seller receives another offer, the buyer has a specific amount of time to buy the house, whether his/her existing house is sold or not. If the buyer cannot purchase the house, the seller can cancel the contract.