Purchase agreements and contingency clauses

On Behalf of | Sep 29, 2021 | Real Estate |

Purchasing a home is a major life event for those in Mississippi and elsewhere. Most would not go into this process without thoroughly thinking about it, as one would not want to purchase a home with issues or for a price well above its worth. Therefore, it is important to understand everything that comes with the final purchase of a home, the real estate law issues that could arise and what mechanisms exist to get out of a purchase if an issue does arise.

Purchase Agreement

In simple terms, a purchase agreement helps ensure that buyers and sellers are on the same page. In other words, it spells out all the details of the home purchase. It is a legally binding document that explains what the seller will get and what the buyer will get. It also details what steps need to be taken by both parties and other essential information, such as the charge of closing and the mortgage lender of the buyer. It should be noted that the seller of the home cannot transfer the house to the buyer without a signed real estate purchase agreement.

Getting out of a purchase agreement

While much information and thought go into the drafting of a purchase agreement, it is important to understand that things could come up after the signing. As a means to protect the buyer, contingencies could be put in place if they are agreed to during negotiations.

A contingency could help either force an action to be taken or could allow the seller to back out of the deal. They are usually one of two types. The first is one where the seller needs to complete something before the sale can be completed. This could mean a repair or the addition of something. The second is something, that when discovered by the buyer or the seller, to allow them to back out of the deal. What these situations are would be discussed during negotiations and put in the contingency clause.

Buying a home has many working parts. As such, a buyer should be aware of them all and what issues could potentially delay a purchase or cause a buyer to drop out. This can be a complex transaction, making it imperative that buyers understand their rights and what action they could take to protect them if a problem arises.