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Why use contingency clauses when closing on real estate?

On Behalf of | Sep 5, 2023 | Property Law

The real estate market can be such that you feel under great pressure to close when you find a home you like. Yet, rushing ahead to beat real or imaginary competition could leave you with lasting problems. This is where contingency clauses come in.

Contingency clauses allow you to secure the property but still back out for certain reasons if you need to. It’s not a complete non-committal, so you still need to be pretty sure before signing an agreement that contains contingencies.

Here are some of the things that contingency clauses can cover:

An inability to secure the funding

You typically want to speak to a mortgage advisor or lender before closing. You need to know what sort of offer they can give you. Yet, sometimes, when you return to firm up the offer, they tell you they can no longer give you the same deal or perhaps any deal. 

Issues with the title

Unfortunately, not all properties come with clean titles, and, in some cases, the sellers know about issues but do not disclose them. You need to be sure that once you purchase the property, it will be all yours, and you won’t have to worry about claimants to the title appearing out of the woodwork

Issues with the property 

It’s crucial to get a survey to examine the state of the property and the land it stands on. A contingency clause should allow you to negotiate the price or walk away if the issues are anything other than minor.

Consider learning more about how to protect your money when buying real estate. Any investment that big deserves careful consideration before you commit.