Se Habla Espanol?
Buying or selling a house is a big decision. Whether you are going through this process so you can find a home that you will live in, or you are purchasing or selling an investment property, you want to make sure that everything goes smoothly. One of the things that can make a real estate deal a little more complicated is the use of contingencies.
A contingency is a stipulation that allows either party to back out of the agreement if certain requirements are not met. They are very useful in that they allow two parties to come to an agreement with the assurance that all necessary steps will be taken before the sale is finalized. Learning about the different types of contingences in real estate deals will help you to use them properly.
Financing Contingency
One of the most common types of contingencies is the financing contingency. This is where a deal is made to sell the house, but only if the buyer is able to get their financing ready by a set time. Ideally, the buyer will have a pre-approval from their bank or other lender so it is not a problem, but having this contingency helps to protect the seller from unreasonable delays.
Home Inspection Contingency
Another frequently used example is the home inspection contingency. This is where the buyer agrees to purchase the home, but only if it passes the inspection with no specific issues. This type of contingency can also be written so that the seller has to address any problems found from the inspection or else the buyer can back out of the deal.
Title Contingency
When you buy real estate, you need to be sure that there are no problems with the title that you receive. For example, you do not want to discover down the road that there was a lien on the property that you are now responsible for satisfying. This is why a title search is typically done before a sale is finalized. Having a title contingency in place will protect the buyer from being committed to purchase even if problems are found.
Appraisal Contingency
There are many factors that influence how much a home should sell for. In many cases, lending companies will only provide financing up to the amount that the real estate appraised for. Because of this, it is often necessary to have a contingency in place saying that the sale will only go through if the appraisal values the home at a set price or higher.
Home Sale Contingency
It is not uncommon for someone who owns a home to want to buy a new one so they can move into something that fits their needs better. If the buyer does not want to be stuck with two mortgage payments, they may put a home sale contingency in place. This makes it so the sale will fall through if they are unable to sell their current home within a set amount of time.
Helping with All Your Real Estate Needs
Whether you want to have contingencies added to a real estate contract or you want to make sure that a request for a contingency is reasonable, we are here to help. We have years of experience helping people through complex real estate transactions and are ready to help you too. Contact us to discuss your specific needs today.
Drucker & Mattia PLLC
Latest posts by Drucker & Mattia PLLC (see all)
- Succession Planning In 7 Steps - April 15, 2024
