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Buying a home is a major purchase, so you must protect yourself during the process. Since signing a contract binds you legally to the agreement, it can be difficult to back out of the deal once you sign it. That’s why buyers and sellers often include contingencies in purchasing contracts. In real estate law, contingencies allow parties to cancel or renegotiate the terms when certain conditions aren’t met. If you’re on the market for a home, here are a few common stipulations you should consider including in a real estate contract.

What Contingencies Should Home Buyers Make?

1. Mortgage

Financing contingencies typically allow you to back out of the deal if your mortgage agreement isn’t completed or doesn’t cover the cost of the home. With this stipulation, you don’t have to pay for the property without a mortgage. 

Similarly, if a third-party appraisal finds that the property is worth much lower than the asking price, a mortgage provider may withdraw the loan. In this case, an appraisal contingency protects you when you lose financing.

2. Inspection

real estate lawIn New York, sellers can provide buyers with credits and not disclose issues with a property, such as mold, plumbing leaks, roofing problems, and pest damage. Disclosure laws in the state also don’t offer buyers many protections.

You should always hire an independent home inspector to assess the property and pinpoint any issues. With this contingency, you can revisit your offer if the inspector finds problems with the home, allowing you to renegotiate the price or back out entirely.

3. Insurance

Sometimes, a property can contain risks that aren’t covered by a standard home insurance policy. For example, homes in paths of hurricanes and floods may be too risky to insure. If you have trouble securing coverage or need to purchase extra, this contingency allows you to change or cancel the deal.

4. Title

Before you buy a home, an attorney or title agency must run a title search on the property. If there are any issues regarding ownership history, you must have them resolved before closing the deal. Otherwise, real estate law may find that the home rightfully belongs to another party. This contingency allows you to cancel the deal when you uncover ownership issues.

 

If you are purchasing a home in New York, Robert A. Schwartz is available to protect your interests at every stage of the process. Serving the metropolitan area of Rochester, NY, this attorney helps you develop contingencies and resolve issues before closing the deal. Visit him online to learn more about his work with real estate law, or call (585) 334-4270 to schedule a consultation.

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