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We all know that there will be a contractual agreement with contingency clauses in any real estate transaction. But it does not mean that the transaction will be smooth and as expected.
Once known as Weasel Laws, the contingency clauses in contract play a major role in the real estate transaction. The clauses are dealing with the situation of either buyer or seller weaseling out due to one or other contingency.
The contingency clauses are aimed at protecting the buyer and the seller involved in a real estate deal. The commonly used clauses are described here.
- Loan contingency deals with the situation by which the buyer is unable to get the required loan. In this situation he can go out of the deal.
- Sale of another home contingency is a condition in which the buyer could not able to sell another home within the time frame to acquire the offered property.
- Title report contingency clause deals with the easements, encumbrances and liens on the property. If the buyer does not accept the states of the title report, he can withdraw from the deal.
- Home inspection contingency occurs when the buyer identifies some undisclosed damages to the property. In this situation the buyer is not bound to hold on the contract.
- Purchase agreement need not be valid if the property does not meet the requirements put up by the lender. Mostly it will not meet the appraisal guidelines.
- Buyers can back track if there is an evidence of termite problem. The clear evidence of wood boring insects comes under contingency clause.
- The lead based paint can be hazardous to health. The buyer can inspect the house to assess the paint of the property. If he locates lead based paint, he can come out of the contract.
- In some areas, drinking water will be drawn from the wells. If the water does not pass the health inspection, buyer can go out of the deal.
- In the condos and townships, owners association's clearance is required for a buyer to settle there. If they do not give the necessary permission, the buyer will be allowed to go out of the deal.
- Other undisclosed facts about the property, like an oil company holds the right to drill etc can make the buyer to raise his objections and he may even withdraw from the contract.
Make sure that while purchasing a property, you are listing out all kinds of the contingency clauses in the contract. The listing of all these contingency clauses will ultimately help the buyer and seller as well.
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