During a house purchase there are many things which can go wrong and it might become necessary to cancel the purchase contract. In such situations contingency clauses present in the contract can save you so that you do not have to pay any kind of penalty for backing out of the contract. In the following sections we will look at some such clauses which you should include in your agreement.
Various Contingencies and Their Use
Homeowner's Insurance
For protecting their investment most lenders will ask you to have hazard as well as fire insurance. In case you are not able to get the insurance before closing then lender will not pass your loan. If you are not buying your own policy then it will be a loss for you since you will be required to pay higher interest on expensive insurance lender will take out on your behalf. Afterwards if you are not able to make the payment on the insurance then it will lead to foreclosure.
In specific areas you will have to take additional coverage for problems such as earthquake, flood and hurricane which are generally excluded from normal policies. In case the house is in flood zone then it will be necessary to get flood insurance.
For avoiding problems later on it is always advisable that you apply for the insurance immediately after the purchase agreement is made. After getting the policy you should send it to closing agent or the escrow company well ahead of the scheduled close date.
In this context it you will also have to add a contingency in the house purchase agreement which states that you will only buy the house if you are able to get the insurance. To accomplish this agent will have to add ทาวน์เฮ้าส์มือสอง a rider to addendum in purchase contract.
Property Survey
You need to make the purchase contingent upon satisfactory survey. A survey will inform you whether the house encroaches on any of the neighboring properties. Additionally, the bank will also require such survey to be completed before a home loan is approved.
Survey will clearly explain the property lines and it will help you in case you have future plans of setting up a swimming pool or change the fencing. You should also make sure that the seller gets written statements from neighbors who have encroached on the property earlier and those problems were eventually settled.
Review Contingency
This clause can be included in the purchase agreement which will state that the purchase will be subject to assessment as well as approval by your lawyer. The benefit of such review contingency is that it provides you with a way out in case due to some reason you realize that purchasing the house will be a mistake.
It is also possible to add a neighborhood review contingency which will provide you a fixed time frame for reviewing the neighborhood to be sure this is the place you are ready to shift to. In case you find any problems you will have the option to cancel the contract and get back the deposit amount.
As a final note we can say that it is quite necessary to have these contingency clauses in your purchase contract. Such clauses make it easy for you to cancel a purchase agreement if it becomes necessary to do so without facing any penalties.
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