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Contingencies, your safety net
When you start negotiating a home purchase or sale, you should include standard contingencies, or conditions, in the purchase contract.
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Contingencies, your safety net
When you start negotiating a home purchase or sale, you should include standard contingencies, or conditions, in the purchase contract.
You may also want to add unique contingencies depending on your circumstances. If you as a buyer doesn't satisfy a contingency, the seller can cancel the contract and you may be out the deposit. If the seller doesn't satisfy a contingency, you can cancel the contract and get the deposit back.
You should include these three contingencies in any purchase contract:
ü Financing
Buyer or seller can back out if loan is not approved.
ü Inspections
Buyer can back out if inspections of property condition, pests, lead, radon levels, or the neighborhood itself are unsatisfactory, and if the buyer and seller can't agree on remedies.
ü Title
Buyer can back out if property title is unclear.
Other Common Contingencies:
ü Right of review (for common-interest developments or cooperatives)
Buyer can back out if master deed, bylaws, budget or conditions, covenants and restrictions are unsatisfactory.
ü Contingent sale
Buyer or seller can back out if buyer's current home fails to sell within a certain time limit.
ü Insurance
Buyer can back out if unable to obtain homeowner's insurance.
ü Disclosures
Buyer may be able to back out if seller fails to disclose such issues as earthquake hazard, flood hazard, lead (in homes built before 1978) or, in states where required, other material facts or defects about the property.
ü Repairs
Buyer can renegotiate or may be able to back out altogether if agreed-upon repairs are not satisfactory.
ü Final construction approval (new homes)
Buyer must approve finish work if construction is not completed before purchase contract is signed.
ü Contract review
Buyer or seller has right to have the contract reviewed and approved by an accountant or attorney before sale can move forward.
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