Once you decide to close on a property, it’s important to allow yourself a way to back out if needed.
Clearly, you can’t just back out because you feel like it. If you could do that, it would make the purchase contract you sign worthless. Ye,t you may have valid reasons to need to withdraw your offer.
This is where contingency clauses come in. They’re a legal mechanism within the purchase contract that permits you to withdraw without penalty if certain things occur. Here are some contingencies to consider:
1. Funding issues
Maybe your house sale falls throw, or perhaps the mortgage lender that pre-approved your loan changes their mind or alters the terms. If those happen, proceeding with the purchase may be impossible.
2. Title problems
You should always get a comprehensive title search when buying a property. Because they can be costly, they’re usually only done once there’s an agreement on the table. That’s why you need a contingency stating you can back out if the title search finds issues that were previously hidden. Title searches can look for problems such as disputes over ownership, outstanding liens or issues with the land like easements and other encumbrances.
3. Home inspection fails
Home inspections can keep you from buying a property that looks good but has hidden flaws. You may discover problems with lead paint, a leaky roof, bad wiring and unlicensed remodels – all of which would be your problem if you buy.
Contingencies suit buyers more than sellers, so they might resist some of your attempts to include them. Getting legal help to understand your rights and push for the contingencies you need is advisable. Buying a house is a huge commitment, so it’s important to only proceed once you are sure.