September 10, 2019
Why Contingencies Might Matter in Your Real Estate Sales Contract
There’s no law that says you need an attorney to buy or sell real estate in Pennsylvania. That said, a number of residential homebuyers and sellers ultimately wish they’d had a lawyer draft their real estate sales contract.
It’s not as simple as buyer’s remorse. Although, even that’s in the realm of possibility if you’re out looking for your dream home. The idea that you’re stuck in a contract could absolutely make you sick to your stomach.
Meanwhile, an assortment of other reasons may actually put you in panic. You may or may not have realized it at the time you signed your real estate sales contract. Sometimes, inserting the right contingency clause can save you a great deal of heartache and money.
There’s something else that every prospective real estate purchaser in Pennsylvania needs to consider. While it’s totally legal for a title company to do your closing, you’d be hard pressed to find one that offers you advice on the terms of the contract itself. Ethically, they’re all cognizant of their obligation to pass you on to an experienced real estate attorney for that type of guidance.
Contingencies and Your Real Estate Contract
More than likely, you can already guess how a contingency could impact your real estate contract. In simple terms, it boils down to if “A” happens or fails to occur, the contract is null and void. However, your intuition might fail you when it comes to determining exactly what “A” could represent you.
First, think of it from a financial standpoint. You’ve provided the seller with pre approval from a mortgage company. For whatever reason, you can’t secure the financing to complete the transaction. No doubt you’re in a tizzy trying to figure out how you’ll fulfill the terms of the contract and pull thousands of dollars out of thin air.
You can’t expect the seller to wait forever until you finally get a loan approved. In many cases, it may be your broker that prepares the contract using a Standard Agreement for the Sale of Real Estate offered by the Pennsylvania Association of Realtors.
The Standard Agreement does contain the option of selecting a mortgage contingency, but it requires a check in a box. Did you look before you sign? Is it selected? Also, how specific or vague is the language of the agreement?
In the meantime, there are other reasons you might want to ensure you have contingencies set up in your real estate contract. These include the following:
- Sale of your existing house
- Results of home inspections
- Expectations that the buyer make repairs within reason
The bottom line is that a real estate contract represents a legal document. Your signature commits you to the terms as outlined within the document. Some would say it only makes sense to get things checked up front before you face a nightmare when you try to back out of the deal.