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Real Estate --- Contract Contingency Clauses
When signing your contract it’s beneficial to go over the contingency
clauses. Having the contract in your hands doesn’t mean everything is
perfect. Many contracts include weasel clauses which enable a buyer or
seller weasel out of the deal easily.
There are many contingency clauses in place now to care for both the buyer
and the seller. Here are some of the more frequent ones being used in the
real estate market today.
1) Loan contingency. If the buyer can not get funding in a certain amount of
time he or she can withdraw the deal.
2) Sale of another home contingency. The buyer has made an offer but it is
dependent upon whether the home he now has will sell. If it does not sell
within a set time, the buyer is not held accountable for the purchase offer.
3) Home inspection. The sale is contingent on whether the property will pass
the home inspection. The buyer has the right to inspect the home for any
unforeseen damage which may not have been made known.
4) Appraisal. If the property does not meet the appraisal guidelines set
forth by the lender, the buyer does not have to maintain his end of the
purchase agreement.
5) Lead based paint inspection. When a home has been built prior to 1978,
the buyer can have a lead base paint inspection. If there is evidence of
lead based paint, this lets the buyer out of the contract. The house would
be deemed hazardous.
6) Water inspection. Many times the home is in a rural area where there is
no access to city water. The supply is by a well. The well must be checked.
If it does not pass a health inspection, the buyer does not have to buy the
property.
7) Wood boring insects. A termite inspection is mandatory so there is no
chance of hidden damage. Although this is a problem which can easily be
repaired, many buyers will not buy a home which has had evidence of
termites.
8) Hazardous material contingency. This is similar to the lead paint
inspection. During the home inspection, the contractor may come into contact
with black mold or asbestos. Unless there is an agreement between the buyer
and seller to have this taken care of the buyer can walk away from the deal.
9) Owners association acceptance. In some condos and town houses, the buyer
must qualify for the home owners association. If they do not get accepted,
they will be allowed to back out of the deal.
10) Title report. The title report will let the parties know about any
liens, encumbrances, or easements on the property. If these are not
acceptable to the buyer, they can walk away and not be held accountable.
Something simple like the seller forgetting to mention the oil company holds
the mineral rights to the property and can drill anywhere it wants, may make
a buyer think twice about buying the property.
These are just some of the many possibilities which can be listed in a
purchase agreement. It is up to the buyer and seller to work out as many of
them as they can to seal the deal. Sometimes this just does not happen. Here
is where your real estate professional can help to make sure things are
worked out in a timely manner. But, still things can and do go wrong, than
each party must move on to the next house or buyer.
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