Buying a home in the McMinnville area, whether it is your first home, your forever home or your retirement home, is an exciting process. However, it is also a complex process with many legal details to work through. One step that must be taken when you make a formal offer is to execute a real estate purchase contract. Of course, such contracts must include the address of the property and the purchase price. However, there are other clauses — referred to as contingencies — that should also be included in a real estate purchase contract.
Interest rate contingencies
Most people in Tennessee cannot afford to pay for a new home with all cash up front. Instead, they will take out a mortgage to pay for the home. However, they will want to do so at a favorable interest rate. Therefore, their purchase price should be contingent on obtaining a mortgage with a specific interest rate.
Closing cost contingencies
Closing costs are expenses associated with the sale of the home that are above the property price itself. These costs may include escrow fees, title search fees, notary fees and recording fees, among other costs. Generally, the buyer pays closing costs. If the buyer wants the seller to pay some or all of these costs, a seller assist contingency clause should be included in the purchase contract that specifies who is paying which costs.
Home inspection contingencies
Generally, when a person purchases a home, they will have a home inspection performed. It is important to have a home inspection contingency clause in your purchase contract. This clause allows you to back out of the contract if the inspection uncovers significant flaws in the home.
Sale of your current home
If you must sell your current home in order to purchase your new home, your purchase offer should be made contingent upon this sale. Such contingency clauses should include a reasonable time frame for the sale of your current home, as sellers generally do not want to wait indefinitely.
Learn more about purchasing real estate
These are only four examples of some contingency clauses to include in a real estate purchase contract. In the end each person’s situation is unique, and a real estate purchase contract should be drafted in a manner that protects their rights and interests. This post is for educational purposes only and does not contain legal advice. Our firm’s website may be a good resource for those looking to buy or sell a home.