Understand More About Home-Buying Contingencies

Both buyers and sellers need to know about home-buying contingencies in a contract. These clauses can offer some advantages but may also create certain obligations that need to be met within stated timeframes. This may serve to move the purchase of a property along or provide a legal means for a party to get out of the contract. What should buyers and sellers know about home-buying contingencies?

Learn more about common Canadian home-buying contingencies before signing a contract today.

Where to Find Those Home Sale Contingency Clauses?

These clauses may be located within the real estate sales contract or contained within an offer to purchase property. For the transaction to be considered as binding, the contingency clauses must be met. If this does not occur, any party may decide to back out without consequences. In a seller's market, some buyers may choose to forego such clauses. This may make them more attractive to a seller. However, they may assume more risk when purchasing a property without including home-buying contingencies.

What Are Some Canadian Home Contingencies?

Home-buying contingencies have become expected in purchasing contracts. Contingencies often include:

• A Sale and Settlement Contingency
• The Settlement Contingency

In a sale and settlement contingency, a buyer is looking to sell their current home before purchasing a new home. They are given time to do so. However, at the same time the seller continues to show the home and may attract additional offers. If a seller gets an offer, the seller has up to 48 hours in many cases to respond and remove the clause. If this does not occur or is not feasible, the seller is allowed to accept another offer.

This provides a way for the buyer to show serious interest in a home with the intent to buy while allowing them to get the equity and finances needed from their original home. Sellers still have means to show and market a home during the process and not lose out on the possibility of additional offers. If the contract is terminated, any earnest money deposit is returned.

A settlement contingency occurs later in the process. It happens before closing and gives some measure of protection to a buyer. No other offers are to be accepted and with this clause the buyer is expected to close on a home by a stated date.

What Are A Few Disadvantages of Home-buying Contingencies?

It can take time, money and effort to sell a home. When home contingency clauses are not met, a homeowner may have to start showing a home once again. This can be a hassle and a disappointment for the seller that believed a buyer was interested in going to closing on their home. Buyers often receive earnest money deposits back. However, they may be out appraisal fees, home inspections fees and more if either party does not attend to meeting stipulations by the deadlines stated on the contract.

Learn More About Home-buying Contingencies

There is much to understand about these clauses and those buying or selling a King's Heights home may want to know what to expect about common home-buying contingencies in their area. Sellers may agree to contingencies if their home has been on the market for over 90 days without an offer and may have to contend with the uncertainty that comes with settlement clauses. A seller may want to discuss home contingency clauses with a reputable agent prior to marketing a home in Canada.