Is There a Statute of Limitations on Asterisk Clauses?
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
For the uninitiated, an “asterisk clause” Purchase Agreement — invariably for a home that’s in multiple offers — is called that because, instead of filling in an offer price, the would-be Buyer literally puts in an asterisk.
In the margin next to the asterisk (or, at the bottom of the page), there’s some variation of this language: “Buyer will exceed the highest offer by $5k (or some other increment), up to a maximum of [$_______ ].”
Home Seller to Buyer: “the Price Just Went Up”
Implicit in an asterisk clause offer is the understanding that the asterisk clause Buyer will beat the highest offer currently on the table.
But, what happens if, long after the dust has settled on multiple offers — indeed, after the asterisk clause Buyer and Seller have entered into an executed Purchase Agreement, and even after the Buyer’s Inspection Contingency has been removed — another, higher bidder for the home emerges?
Can the Seller go back to the asterisk clause Buyer, and compel them to pay more for the home?
11th Hour Offer
In fact, I recently heard of just such a scenario at a continuing education class.
Unfortunately, no word on how it turned out.
But, I’m guessing the Seller failed to get the Buyer to pay more.
That’s because it’s likely that the “asterisk” language would have been superseded by a Counter Offer by the Seller to the Buyer specifying an exact sales price, which became binding once both parties signed it.
For more on the perils and pitfalls of asterisk clauses, see “Multiple Offers & Asterisk Clauses“; “Asterisk Clauses Make a Comeback“; “What Asterisk Clause Offers & Contingent Offers Have in Common“; and “Daisy Chains, Dominoes, & Contingent Offers.”