Deal structure

How to assign a contract with a kick-out clause

Assigning a contract with a kick-out clause requires careful attention to the specific terms, as it gives the original seller an out if a better offer comes along. Understand how this clause impacts your ability to secure a buyer and close the deal.

October 19, 2026 · 3 min read

Understanding the kick-out clause

A kick-out clause, sometimes called a "right of first refusal" or "escape clause," allows a seller to continue marketing his or her property even after signing a purchase agreement with you. If the seller receives a more favorable offer, the clause typically gives you a specific timeframe, perhaps 24 to 72 hours, to either remove certain contingencies or match the new offer. If you cannot or will not, the seller can "kick you out" of the contract and accept the new offer.

This clause protects the seller by allowing him or her to pursue higher offers while still having your contract as a backup. For you, it means your contract is not entirely locked down until the kick-out period has passed or the clause is no longer active.

When a seller might insist on a kick-out

Sellers often insist on a kick-out clause when they believe their property might attract higher offers, but they are unwilling to risk waiting. This is common in hot markets or when a seller needs to move quickly but also wants to maximize his or her sale price. He or she might be motivated to sell but still wants to explore all options.

You might encounter this with a seller who is on the fence about your offer. He or she wants the certainty of a contract but also the flexibility to potentially get more. It is a way for him or her to have his or her cake and eat it too, so to speak.

Communicating the clause to your cash buyer

When you assign a contract with a kick-out clause, you must be transparent with your cash buyer about its existence and terms. This is not a detail to hide; it is a critical part of the deal structure. Explain exactly what happens if the kick-out is triggered, including the timeframe for a response.

Your buyer needs to understand the inherent risk and be prepared to act quickly if the situation arises. A well-informed buyer is less likely to back out or feel blindsided if the clause is exercised. This also helps in setting realistic expectations for the buyer on the speed of the transaction.

Structuring your assignment fee

The presence of a kick-out clause might influence how you structure your assignment fee. Given the added risk and potential for the deal to fall through, you might need to adjust your fee expectations or factor in a quicker turnaround for your buyer. The faster you can find a buyer and move to close, the less time the kick-out clause has to be an issue.

You are essentially taking on a contract with an escape hatch, so your compensation should reflect the effort and risk involved. For more on how these deals work, you might find "/for/wholesalers" helpful.

Mitigating the risk of a kick-out

To mitigate the risk of a kick-out, you need to move fast. Secure your cash buyer as quickly as possible and get him or her ready to close. Have your buyers list prepped and be ready to market the contract immediately. You should also ensure your initial offer to the seller is competitive enough that he or she is less likely to get a significantly better offer.

Additionally, negotiate the terms of the kick-out clause itself. Can you extend the response time? Can you limit the types of offers that trigger it? Every small adjustment can give you more leverage. Sometimes, it is about getting your buyer to close fast. For more on the basics, read "/learn/wholesaling-vs-flipping-a-lead".

Questions people ask

Can I still get earnest money with a kick-out clause?

Yes, you can still collect earnest money from your end buyer, but be clear that it may be returned if the kick-out clause is triggered and you cannot proceed with the assignment.

What if my buyer needs more time?

The kick-out clause's timeframe is typically firm. If your buyer needs more time than allotted, he or she risks losing the deal if the seller receives a better offer and you cannot perform. Speed is key.

How long is a typical kick-out period?

A typical kick-out period usually ranges from 24 to 72 hours. The exact duration is a negotiated term in the original purchase agreement.