The Oregon REALTORS® Form 2.21 can be used to create a back up offer in either the first back up position or in the second backup position. A “back up” is an offer by a Buyer that has been accepted by a Seller who is already under contract with somebody else; the back up Buyer is not legally bound to any of the terms of the Purchase and Sale Agreement until the back up Buyer receives proof that all higher priority contracts have terminated or have been revoked.
The back up Buyer’s position in line is known as their “priority.” A contract can only ever be active with a single purchaser [you can’t sell the same home to two people at the same time], so we line the back up offers after the primary contract and move through the back ups accordingly. If the primary contract fails, the Seller then moves on to back up offer number one. If back up offer number one fails, the Seller moves on to back up offer number two, and so on. There should never be two Buyers who are told they occupy the same place in priority (i.e. don’t tell two Buyers that they’re both “back up Buyer number 1”).
When a primary offer fails, the first back up does not go into effect until the Seller provides back up Buyer number one with some sort of affirmative proof that the primary offer failed. This is generally done with a Form 5.3 Buyer’s Notice of Termination, Form 5.5 Buyer’s Response to Termination, or Form 5.7 Statutory Revocation of Offer [described in Form 2.21 as “Required Documents”]. In each of these three instances, the primary offer buyer will have signed a document that says, “The contract is done.” If the Seller cannot provide one of these documents, the primary contract may still be ongoing or there may be a specific performance lawsuit on the horizon; back up Buyer number one will not be obligated nor will the first back up offer become effective until the Required Documents are delivered.
For the second back up offer to become effective, they need all the same Required documents from the primary contract, plus some sort of proof that the first back up offer is over too. This means the second back up Buyer will need to receive (1) a Form 5.3, Form 5.5, or Form 5.7 for the Primary Offer; and (2) a Form 5.3, Form 5.5, or Form 5.7 for the first back up offer or some other proof that the first back up offer was revoked, expired, or was terminated before it became effective.
Once a back up Buyer has received the required documents, the back up offer has become effective and all of the closing dates, timelines and such should be recalculated and restated [the parties should agree to a closing date that is reasonably achievable].