Real estate contracts are some of the most important documents you will sign, no matter whether you are a buyer or seller. These contracts explain the terms of the deal, the sale or purchase price, the length of time the two parties have to settle the deal, and much more. Almost every real estate contract will have contingencies in it and there could be multiple listed. It all depends on the needs of either party and the state of the property that is changing hands. Today, we will take a look at the contingencies that can be included in a real estate contract.
Contingency for Financing
Are you worried that you might lose out on the purchase of a home because of the mortgage approval process? If so, you can ask the buyer to include a contingency for financing in the contract. This contingency gives you time to acquire a mortgage approval, but also provide the seller with peace of mind that they can back out of the sale if the buyer is unable to acquire the appropriate financing.
Inspection Contingency
Another important contingency that is included in almost every real estate contract, including residential and commercial, is the inspection contingency. The inspection contingency lets the buyer back out of the deal unharmed if the inspection fails or if serious issues arise that the buyer simply does not want to deal with once they take ownership of the property. This contingency can also require the seller to make the proper fixes that come back flagged by the inspection in order for the transaction to proceed.
Contingency for Home Sale
Are you selling one property in the hopes of buying another? If this is the case, then your contract with the seller should include a contingency for home sale. This contingency states that the purchase of your new home hinges on the sale of your current home. Therefore, if you are unable to sell your current home, you can back out of the purchase of the new home without facing any penalties from the seller. This contingency can be hard on the seller because it is possible they might have to turn down another offer, which might be better than yours, while you are working on the transaction.
Clause for Kick-Out
A kick-out clause is an important contingency to include in a real estate contract if you are the seller. This contingency allows the seller to continue to market their property if the contract has a home sale contingency listed in it. This protects the seller should the buyer back out because they were unable to sell their current home. Should a second qualified buyer appear, the seller can give you a specified time to end the home sale contingency and move forward with the purchase or else the seller can move to the next offer without facing penalties.
Contact an Attorney
Are you getting ready to buy your first home in Wisconsin? Do you need to sell a piece of property? Either way, it is important to always consult with an experienced real estate attorney when getting involved in the purchase or sale of property. Contact the team at Moen Sheehan Meyer, Ltd. today to schedule a consultation. Call the office at 608-784-8310 to speak with an attorney about your situation.