When signing your contract it�s beneficial to review the contingency
clauses. Having the contract in your hands doesn�t mean everything is
perfect. Many contracts include weasel clauses which enable a buyer or
seller weasel out of the deal easily.
There are many contingency clauses in place now to guard 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 back out of the deal.
2) Sale of another home contingency. The buyer has made an offer but it
is reliant 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 made known.
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 considered 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
examined. 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
rectified, 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 buying the property.
These are just some of the many possibilities 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 insure
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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