Purchasing real estate does not always go smoothly. Multiple issues could catch the unwary buyer out. That is why putting contingency clauses is crucial when creating the purchase contract.
Contingency clauses allow you to back out of the deal if you need to. In effect, you agree to buy the house provided that this happens or provided that does not occur. Not because you find somewhere, you like more, but because of specific circumstances you outline in these clauses. For example:
- Provided I can get the money
What if the mortgage lender backs out or changes the terms initially offered? Or if the sale of your house falls through, leaving you unable to proceed until you find a new buyer?
- Provided I do not find any faults
You see the house, and it seems structurally sound, but you may never spot the cracks hidden under the fresh plaster without a proper survey. Or the roof that is ready to blow off with the next big storm. The survey should cover the land the building stands on and the structure itself.
- Provided the seller owns it
You need to watch out for dishonest characters in any transaction. Yet, you have much more to lose from a guy who sells you a house he does not own than one who sells you a watch that turns out to be a fake. Many properties have title issues, which unscrupulous sellers may conceal or innocent ones are unaware of.
Real estate contracts are complex, so ensure you get help to understand what you are signing and put the necessary protections in place.