Buying A Home? All About Contingency Clauses

Buying a home is a complex process and one in which you must consider a lot of variables. One important concept to keep mind when getting ready to purchase a house involves contingencies. These are conditions or clauses you place into a contract to protect you from any potential problems. This article examines some of the most important contingencies to consider putting into a home-buying agreement.

Inspection

One contingency clause you should absolutely insist upon is having the property inspected before the sale is final. A key point to remember is that the inspection needs to be done by a professional that you hire. You do not want to accept an inspection report by someone working for the seller.

Walk with the inspector as he examines the house. If you see anything that looks unusual or that concerns you, ask a question. You can find a qualified person in your area by contacting the American Society of Home Inspectors.

Sale of Current Home

An issue that occurs quite often when someone is looking to buy a home is whether or not the buyer can sell their current home. If you are unable to sell your current house before closing on the new home, you will be stuck with two mortgages. Not many people are in a financial position to pull this off.

To avoid this potential difficulty, you can place a contingency clause in the contract that allows you to back out of buying the new home if you are unable to sell your old house before the closing date.

Insurance

An insurance contingency clause is also desirable in many cases. For example, you do not want to purchase a home only to discover that you cannot get an insurance policy to protect you if an earthquake or hurricane occurs. If the house is located in an area that is prone to such events, then getting an appropriate policy might prove to be difficult.

An insurance contingency clause provides you with the assurance that you will have a policy or policies that cover you if a disaster strikes. In some instances, your mortgage lender will want you to obtain suitable insurance before they will finalize your loan and will demand that you have an insurance contingency in your contract.

Contingency clauses are a good idea for home buyers, but knowing exactly which contingencies you need can be difficult for the average person. For best results, contact a residential real estate lawyer before signing any contract.