A lot is at stake when you buy a home. There is a good chance you will need to put most or all of your savings down as a deposit. Then, when getting that mortgage, you will be committing a large amount of your income for years to come to paying it off.
If it turns out the home has problems you didn’t know about, you could incur serious financial problems to fix the problems. Issues with a property cannot only make living there uncomfortable, but they can also be unpleasant or even dangerous. On top of that, the stress that results from it all could put a strain on your emotional health and relationships.
Allowing you to back out if certain issues occur
Contingency clauses are safety measures that your legal team can build into the contract you sign to buy the property. While withdrawing from a place you worked so hard to find may feel disappointing, being able to do so could save you those unpleasant consequences mentioned above.
Each clause can cover a particular situation. For example:
- Financial contingency: This can allow you to withdraw if you can no longer afford the property due to the mortgage lender going back on their offer or the buyer for your home dropping out.
- Defects contingency: Commissioning a survey can help you detect issues with the structure, land and more.
- Title contingency: Not all property issues are physical. Some are about the paperwork. Boundary disputes, mechanic’s liens and contested titles can all reduce the security of a purchase.
Finding issues does not always require you to withdraw from the purchase. Sometimes you can use them as a means to negotiate the price, or just have the seller resolve the issues before you proceed. However, including the right contingencies helps you retain more control over the decision. This is where having the right legal guidance can make all the difference.
