If you are about to purchase a piece of real estate, then it is important to slow down and consider what would happen if something went wrong. However great the property may look to you, there may be issues you cannot see that could cause you to reconsider. You might also encounter problems that prevent you from being able to go ahead with the purchase even if you want to.
If you sign to buy without protections in place, you may be forced to continue with the purchase regardless. Contingency clauses are lines of text you insert into your contract to allow you to withdraw without penalty if certain issues arise. You’ll need different clauses for different situations that could crop up. Here are some:
Funding contingencies
If the mortgage lender you quoted retracts or changes their offer, the property could become too expensive for you. You might also need to back out if the chain you are in breaks and the buyer lined up for your house pulls out.
Title contingencies
Many properties have minor title issues, such as confusion over where the boundary lies. Some have major issues such as a dispute over ownership of the entire piece of real estate. To avoid these becoming your problem to resolve, include an appropriate contingency clause.
Defects contingencies
Maybe the subsoil is weak and prone to slipping, putting the whole property at risk. Perhaps there are dangerous gases in the soil which would make living there a health risk. Or maybe there is just a leak in the roof you did not spot. A professional survey can help discover such problems and a suitable contingency clause can allow you to retract your offer or renegotiate the price based on any concerning findings.
Learning more about how to protect yourself when purchasing property is wise with so much at stake.