When purchasing a home in New York, you may feel tempted as a buyer to waive contingencies so you can submit a clean offer. While doing so might make your proposal more attractive to a seller, you can expose yourself to significant legal and financial risks.
Contingency clauses serve as protections in a home purchase contract where meeting specific conditions is essential to close the transaction. Understanding and negotiating these safeguards is the first step toward ensuring a secure and successful investment.
You can protect your deposit
One of the most critical clauses is the one for mortgage contingency. Once you sign a contract, your deposit is held in escrow until the finalization of all inspections, appraisals and paperwork. In case your financing from the bank falls through, this clause ensures that you get your money back.
You can safeguard your equity lenders
Lenders generally only provide a mortgage based on the appraised value of the home instead of the purchase price. If the estimate is low, you could be forced to pay the difference in cash. An appraisal contingency allows you to walk away from the deal or ask the seller to lower the price to match your bank’s valuation.
You can address hidden costs
Many homes in New York, especially in historic areas or older suburbs, can harbor extra fees that can increase the sale price. With an inspection contingency, you can renegotiate the purchase price. You can also back out if the inspector finds major structural problems, termite damage or environmental hazards in the home.
Helping you buy with confidence
By addressing potential hurdles before finalizing your home purchase, you can ensure that you made a smart financial decision. Working with a legal professional can help you properly draft your contingency clauses while protecting your interests. Your future self will thank you for having these provisions today.
