Real Estate --- Contract Contingency Clauses
When signing your contract itís important to check the contingency
clauses. Having the contract in your hands doesnít mean everything
is perfect. Many contracts include weasel clauses which let 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
4) Appraisal. If the property does not meet the appraisal guidelines
set forth by the lender, the buyer does not have to sustain 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 fixed, 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 dealt with 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 failure 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 purchasing the
These are just some of the many incidents 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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