Whether you are looking to buy your first home or hope to sell your starter home and upgrade now that you have a new family member on the way, you may have some special considerations that impact the viability of potential real estate transactions. Both buyers and sellers often include language in offers and listing contracts that protect them from certain issues.
These terms or clauses, known as contingencies, limit the circumstances under which the contract remains enforceable. For example, when a seller lists their home with a real estate professional, they will likely include a contingency regarding low-ball offers and how long the professional has to market their home. If they don’t receive reasonable offers within a certain time frame, the sellers can terminate the contract with the professional and find someone else who can better market their property.
Both buyers and sellers may include contingencies in a purchase agreement prior to the settlement or closing for the home. These terms can complicate closing or result in a transaction falling out long after a seller accepts an offer on a property.
Common contingencies can lead to a failure to close on your home
If you make an offer on a new home that you hope to move into soon, you may include a contingency in your offer that you have to be able to list and sell your own home within a certain amount of time, often 60 or 90 days. Sellers may also include a contingency regarding their right to remain in the property or sometime after the closing days. Buyers may counter this expectation with a clause of their own that imposes a financial penalty for sellers who do not leave the premises by the promised date.
All of these contingencies are relatively straightforward, but sometimes, the contingencies included can become more complex. The buyer may have made a competitive offer for a price that they will not honor unless the home passes all inspections with flying colors. The buyer may also have contingencies that require the seller to make upgrades or repairs to the property before they will assume possession or go through closing.
When issues arise, you need to have a plan ready
The modern real estate market is competitive in Florida right now, which means that buyers are often quick to make offers of the maximum amount they feel willing to pay, provided that the property and the terms of ownership match with their expectations. Including appropriate contingencies in your offer can protect you from a situation in which you could lose your earnest money.
As a seller, including proper contingencies can ensure that you find a new property to move into and don’t wind up living out of a motel or questionable apartment while you continue your housing search. Mistakes in your documents could lead to legal issues with your real estate closing.
Both real estate professionals and title workers may not understand the law or the contents of the contract, which means that those who know they will require complex contingencies in a real estate closing may want to seek out more expert advice before making an offer on a property or going to their document signing.
