Imagine you’ve finally found the perfect home: a charming property with a great backyard, just the right amount of space and located in your dream neighborhood. The excitement can be overwhelming, but before you commit to the deal and sign the contract, it’s important to consider factors that could impact your purchase.
What if a home inspection reveals glaring issues or the financing falls through? Issues with the property title or a low appraisal that falls way below the agreed-upon purchase price can also present challenges. This is where contingency clauses come in.
What are contingency clauses?
Contingency clauses are conditions in a home purchase contract that must be met for the deal to move forward. Some common contingency clauses include the following:
- Home inspection contingency
- Financing contingency
- Appraisal contingency
- Home sale contingency
- Title contingency
Think of them as built-in safeguards that give you, the buyer, a way to back out of the sale agreement or renegotiate the terms if the conditions specified aren’t met. For instance, you may pull out of the deal if you do not secure a favorable mortgage with a financing contingency or if the appraisal falls short of your expectations with an appraisal contingency.
Without contingency clauses, you could be locked into a purchase with no way out if unexpected problems arise. This could see you lose your deposit or face legal action if the seller decides to sue you for a breach of contract.
Protect your investment
Given the importance of contingency clauses when buying a home, seeking legal assistance to ensure they are well drafted and included in the purchase agreement is highly prudent. Experienced legal guidance can also go a long way in protecting your interests as you navigate one of the biggest purchases of your life.
