Backup Offers in Florida: How Riders W and X Work Together
FLORIDA TRANSACTIONS ONLY: This article discusses Riders W and X as used with Florida Realtors®/Florida Bar residential contracts. Other states may use different contracts, forms, and procedures.
Receiving multiple offers is exciting for a seller, but selecting the strongest offer does not guarantee a smooth closing. An offer may look excellent on paper and still fall apart because of financing problems, the buyer’s inability to sell another property, missed deadlines, or other complications.
Rather than starting over if the primary contract terminates, a seller may be able to secure a backup contract. Florida Realtors® provides two forms designed to assist with this situation:
Rider X: Kick-Out Clause
Rider W: Back-Up Contract
Each rider serves a different purpose, but they are designed to work together.
Why Would a Seller Want a Backup Contract?
Imagine a seller receives several offers. One stands out because it includes a high purchase price, favorable terms, and few apparent contingencies. The seller wants to accept it but may still have concerns about the buyer’s ability to close.
For example, a buyer may submit what appears to be a cash offer but ultimately need financing. Another buyer may need the proceeds from selling an existing home, even if that condition is not clearly stated in the offer.
The seller could accept the strongest offer and then see how it goes. However, if the transaction falls apart several weeks later, the seller may have to return the property to the market, schedule more showings, and attempt to reconnect with buyers who have already moved on.
A properly structured backup contract gives the seller another option.
Rider X: The Kick-Out Clause
Rider X permits the seller to continue showing the property and enter into a bona fide backup contract after accepting the primary contract.
If the seller accepts a backup contract, evidence of that contract is provided to the primary buyer. The purchase price and information identifying the backup buyer are redacted.
The primary buyer must then respond according to the requirements and deadlines established in Rider X. This generally requires the buyer to:
Make an additional deposit
Waive the contingencies identified in the rider
This can be especially important when the primary buyer must sell another property or has other conditions that create uncertainty for the seller.
If the primary buyer complies with Rider X, the primary contract continues. However, the buyer gives up the specified contingency protections and places additional deposit funds at risk.
If the primary buyer fails to make the required additional deposit by the deadline, the primary contract terminates, the original deposit is returned as provided by the rider and the seller may proceed with the backup buyer.
In practical terms, Rider X requires the primary buyer to demonstrate a stronger commitment after the seller secures a legitimate backup contract.
The Backup Offer Does Not Have to Be the Second-Highest Offer
Price matters, but it should not be the seller’s only consideration when selecting a backup offer.
A lower-priced offer with verified financing, a substantial deposit, a shorter inspection period and a realistic closing date may be a more dependable backup than a higher offer with questionable financing or difficult contingencies.
The seller should evaluate the entire offer, including:
Financing strength
Deposit amount
Inspection terms
Appraisal provisions
Contingencies
Closing date
Requested concessions
The buyer’s overall ability to perform
The purpose of a backup contract is to provide the seller with a reliable Plan B. Selecting another impressive-looking offer that is unlikely to close defeats the purpose.
Rider W: The Back-Up Contract
Once the seller selects a backup offer, Rider W establishes how that contract will operate while another buyer remains in the primary position.
The parties select a deadline through which the buyer agrees to remain in the backup position. If the contract has not moved into the primary position by that date, the backup buyer is no longer obligated to purchase the property.
Rider W also permits the backup buyer to terminate the contract before receiving notice that it has moved into the primary position. This allows the buyer to continue considering other properties instead of waiting indefinitely for the primary contract to terminate.
That flexibility matters. A buyer may be willing to remain in a backup position for a limited time, but most buyers would rather not place their home search on hold forever.
When Does the Backup Contract Become Effective?
One of the most important provisions in Rider W concerns the Effective Date.
If the primary contract terminates and the backup buyer is still under contract, the seller provides notice that the backup contract has moved into the primary position.
Under Rider W, the Effective Date becomes the date the seller delivers that notice to the backup buyer.
This is important because many contractual deadlines begin on the Effective Date, including deadlines involving the following:
The earnest money deposit
The inspection period
Financing obligations
Other time-sensitive requirements
The Effective Date originally stated in the main contract is superseded by the language in Rider W. Once the backup buyer receives notice that the contract has moved into the primary position, the agent must carefully calculate and calendar the applicable deadlines.
Missing this detail can create considerable confusion—and real estate contracts already provide enough drama without everyone working from a different calendar.
Can a Seller Accept More Than One Backup Contract?
Accepting multiple backup contracts requires additional caution.
Rider W does not establish an order of priority when more than one buyer is waiting behind the primary contract. Without properly drafted language, multiple backup buyers could believe they are entitled to move into the primary position.
If a seller wants to accept more than one backup contract, the parties should consult a qualified Florida real estate attorney. The attorney can prepare language that clearly establishes the order of priority and explains the rights and responsibilities of each buyer.
Real estate licensees should not attempt to draft custom legal language to resolve this issue. Doing so could constitute the unauthorized practice of law and expose the seller, agent, and brokerage to unnecessary risk.
Do Not Forget the Main Contract
Attaching a rider is only part of the process. The appropriate rider must also be identified in Paragraph 19 of the Florida Realtors®/Florida Bar contract.
Agents should confirm that:
The correct box is checked in Paragraph 19.
The rider matches the contract being used.
All required blanks are completed.
The rider is signed or initialed as required.
Copies are delivered to the appropriate parties.
All deadlines are properly calculated and entered into the transaction calendar.
Rider X protects the seller’s ability to consider and act upon a backup contract. Rider W explains how the backup contract operates while waiting to move into the primary position.
When used correctly, these two forms can provide a valuable safety net if the original transaction falls apart. Agents should always use the most current versions of the forms, follow their brokerage’s policies and seek guidance from their broker or a qualified Florida real estate attorney when questions arise.
This article is for general educational purposes only and does not constitute legal advice. Contract forms and legal requirements may change. Real estate professionals should consult their broker or a qualified real estate attorney when guidance is needed.
