CONTINGENCIES, NO KICK OUT

DON'T LOOK NOW BUT THERE SEEMS to be a wee bit of confusion among the water cooler crowd about what the MRIS designation—Cntg/NO KO—actually means, and how does it effect ordinary buyers and sellers who may want to know how to structure a real estate contract to best protect their own interests while also keeping a realistic approach to the realities of a given market. This "Cntg/No Ko" shorthand is found on many listed properties these days, as is the "Cntg/Ko" tag. So, given the nature of the beast, I thought this an excellent topic for the TPG market Push, and here's what I found from a rather trusted resource:

Active—Indicates that the property is available with no contingencies, contract or application registered against it. Contact an agent immediately for showing.

Contingent/KO—(Contingent with Kick Out) - Indicates that the property is available but has a contract with at least one pending contingency that includes a kick out clause. Sellers are accepting contracts on these properties if the buyer meets the criteria to "kick out" the existing contract. Contact an agent for more details.

Contingent/NO KO—(Contingent with No Kick Out)- Indicates that property is available, but has a contract with at least one pending contingency. The pending contingencies do not contain a kick out clause. These properties should be watched in case the existing contract falls through. Contact an agent for more details.

Pending—Indicates that property is under contract. The pending status means there are no contingencies except normal inspections, title search, and possibly loan approval. These properties should be watched in case the existing contract falls through.

But what does kick out actually reference? To find out I searched an online glossary for the term "kick out clause" and found this clarifying entry:

Definition: A term that refers to a real estate contract contingency that's often used when a home buyer places a house under contract with the understanding that he must sell his current house before finalizing the new purchase.

Sellers holding a contract with a kick out clause continue to market the home. If they receive another offer the buyer has a specific amount of time as stipulated in the clause to remove the contingency and move forward to buy the house, whether his existing house is sold or not. If the buyer cannot move forward, the seller can back out of the original contract and sell to the new buyers.

Final analysis for those of us still muddled: the "kick out" occurs when a contingent buyer is kicked out of the contract by another buyer who comes in with a more appealing offer to the seller.

However, what does it mean when a property is advertised as having a ratified contract with contingency but with a no ko, or no kickout clause attachment? This type of contact protects the buyer from other potential buyers but the buyer must still meet deadlines of the contract.