In many real estate transactions, whether they are commercial or residential, there may be the use of contingency clauses. These can be very beneficial in a number of ways, and they also impose certain restrictions and regulations on the transaction.
For example, perhaps you’re looking to purchase a new home. You may want to add contingency clauses to your offer, but what should you think about? How do these work and how can they be beneficial for you? Here are a few examples to consider.
Obtaining financing
First of all, some buyers will use a contingency clause saying that they only have to buy the house if they can get financing. They know that they need a mortgage loan to afford it. This way, their offer isn’t accepted only to put them in an impossible situation where they can’t actually pay for the house.
Passing a home inspection
Another thing to consider is whether or not the home has passed inspection. Even if it looks generally good to the buyer, a home inspector could find hidden damage and other issues. The buyer needs to know that they are actually getting what they are paying for.
Purchasing another home
In some cases, sellers will use a contingency saying that they don’t actually have to turn over the house until they buy another home. They may even put a specific length of time on this. They’re simply trying to protect themselves by ensuring that they have somewhere to live and that they don’t find themselves responsible for two mortgage payments at the same time.
No matter which side of this equation you’re on, you can see how it’s so important to understand what goes in a contract and what legal steps to take.