AFY Godwin Sekyere - FSBO V2

STAGE 4: DESCRIBING THE CONTINGENCIES Contingency is quite simple: it means that the seller has accepted an offer made by the buyer, but the closing of the deal depends on certain conditions being fulfilled. Both parties are free to walk away from the deal if such contingencies ever occur. There are different types of contingencies. Any contingency clauses must be described in detail in the sales contract. As a buyer, you must concern yourself with only two of these: Financing Contingencies — A financing contingency is a clause that allows the buyer to liquidate the deal in case he/she is unable to secure a mortgage. The financing contingency protects the interests of both the buyer and the seller. Usually, the buyer is provided with a time period in which to obtain financing for the purchase. If the buyer is unable to secure a loan, he has the right to break the deal without any legal ramifications. While describing a contingency, you must also clearly mention the time frame within which the buyer is supposed to secure a loan toward the payment of the purchase amount. Other than this, it may also include the loan amount required and the name and details of the lending company financing the deal. Inspection Contingencies — A home inspection contingency clause is important for both parties, as it can go a long way in the closing or breaking of the deal. It gives the buyer the right to commission a professional inspection of the property. If major issues come to light during the inspection, the buyer can walk away from the deal without any penalty, or they can ask the seller to perform the necessary repairs. The inspection must be conducted by a professional home inspector, usually within a week of an agreement being reached. The inspector will carefully scrutinize the exterior as well as the interior of the home. Usually, the plumbing, ventilation, electrical wirings, and other such elements are inspected. However, if personal property that includes electrical appliances and the like is included in the sale, the inspector will examine those, as well.

93

Powered by