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Contingencies are commonly included in most real estate purchase agreements or contracts. They are written clauses that give protection to both the buyer and the seller of a home as well as give them time to assess important aspects of the home before proceeding to the closing. These are normally included in an effort to allow potential buyers and sellers to back out from the deal without facing legal issues in the event the contingencies are not met by either of the parties involved in the transaction.
The common contingencies are usually seen in pre-printed contract forms used by real estate agents. Below are some of them for your guidance.
A home inspection is normally asked by home buyers to ensure that the property they are buying is free from material defects. If in case some defects are discovered during the purchase period, they can ask for an immediate repair from the buyer or they can just back out of the deal. The contingency clauses can specify which party will shoulder the repairs and to what extend. Other options can be included for homes that require repair. A professional home inspection report specifies the date of the inspection and the status of the residential property concerned.
Other inspections such as those on the presence of lead, radon, mold and other toxic chemicals may be included in the contingencies. In addition, inspections and tests may also be performed to check infestation by termites, verify if water from private wells is safe and check if a septic system or well is functioning well. In some areas, water rights to the property may have to be verified to avoid any violations should the new owner decides to dig a well. As for the septic system, a contingency clause may ask for an approval to build a waste system in the absence of one in the property.
Home buyers are also particular about appraisals as they usually want to invest their hard-earned money on a property with a fair market value. With an appraisal report, they can feel confident that the home they’re buying is not overpriced.
Financing is another important contingency. The contract should state the kind of financing preferred by the buyer and which the seller is willing to accept. An appropriate timeframe is also necessary to allow the buyer to get a loan. In some cases, though, the seller can also include his or her own financing contingency such as accepting an offer only after the potential buyer successfully sells their home or only if the buyer is pre-qualified to avail of a home mortgage loan. It is vital to note then that home sellers pre-qualify their prospective buyers so as not to waste their time.
A contingency on deeds is applicable as well. The purchase offer can state what type of deed the buyer expects from the seller during closing. This should be accompanied by a statement from the seller ensuring that the real estate property will be free from liens and other issues that cropped up with the past owners.
So in essence, these contingencies are with a purpose thus, it is vital that they be stated in the contract in the most specific way as possible.
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Source by Gloria Smith