When buying or selling a home, a purchase contract will be created once the seller accepts the buyer’s offer. This agreement will detail the terms of the sale, including important dates during the transaction and the requirements that both parties must meet. Contingencies are an important part of a real estate purchase contract. Buyers and sellers will need to understand the types of contingencies that may be included in an agreement and how these will affect them as they work to complete the transaction.
Types of Contingencies in a Real Estate Transaction
Contingencies are terms in a purchase contract that describe certain conditions that must be met during the transaction. In many cases, these terms will allow one party to back out of the transaction if certain requirements are not met. Common contingencies include:
- Financing contingency - The buyer will need to qualify for a mortgage loan that will allow them to purchase the home. This type of contingency will allow the buyer to back out of the purchase if they are unable to obtain financing with certain terms, such as a specific interest rate or an affordable monthly payment.
- Appraisal contingency - The buyer will want to make sure the home is valued at the amount they have offered to pay. This type of contingency will require an appraisal to be performed, and if the home is appraised at a value less than a certain amount, the buyer may back out of the sale, or the purchase price may be modified.
- Home sale contingency - The buyer may need to sell their current home before they will be able to obtain a mortgage for a new home. This type of contingency will allow the buyer to back out of the sale if their current home is not sold by a certain date. To protect the seller’s rights, the contract may include a kick-out clause that allows the seller to keep the house on the market and back out of the sale if they find a different buyer.
- Inspection contingency - The buyer will be able to complete a home inspection that may identify defects in the home or repairs that will need to be made. This type of contingency addresses how repairs will be handled or allows the buyer to back out of the sale if the seller refuses to correct the issues uncovered during an inspection.
- Title contingency - A title search may uncover issues that will affect the parties’ ability to complete the transaction, such as ownership disputes or liens on the property. This type of contingency will allow the buyer to back out of the sale if these issues cannot be resolved before the closing date.
Contact Our Stamford Residential Real Estate Lawyer
Whether you are planning to buy or sell a home, The Law Offices of Daniel P. Weiner can help you negotiate a purchase contract that will protect your rights and meet your needs. To set up a free consultation and learn more about how we can help protect your rights during a residential real estate transaction, contact our Fairfield County real estate attorney today at 203-348-5846....