Top Real Estate Clauses for Home Buyers
So you’ve been saving pennies, go out with your real estate agent, and found your perfect home, but now that their is a contract you’re scratching your head. When dealing with buying and selling real estate you need to know the law requires everything in writing. You will have to sign a contract in order to move into that beautiful home, so it’s important you understand what you’re reading or you could end up.
What you’ll want to pay attention to is what contingency clauses are on the contract. Think of these as an insurance policy. It’s kind of along the line of “hope for the best, plan for the worst.” Most purchase agreements will have at least one contingency clause like a home appraisal clause, but every once in awhile you’ll see some contracts that go beyond what’s normal. Either way we strongly recommend having an experienced real estate attorney take a look at your contracts, and the information presented here shouldn’t be considered legal advice.
#1 Home Inspection Clause
The home inspection clause is a fairly typical clause you’ll see on most contracts. It gives the buyer the opportunity to get an inspection and decide if they really want to buy it or not. Often this clause will give the buyer the option to list out things they want the seller to fix or they back out of the deal.
#2 Financing Clause
If the buyer doesn’t have the cash on hand to purchase the home they’ll need to find a mortgage. Sometimes the buyer will want to buy, the seller will want to sell, but the bank doesn’t want to finance the purchase for one reason or another. In these cases the buyer will want to back out of the contract, and will place this clause in the contract just in case they find themselves in this situation.
#3 HOA Clause
Some homes will reside in a neighborhood with a homeowners association (HOA). These HOA fees on top of monthly mortgage payments, insurance and anything else they’re paying can be a little too much for some buyers. This clause gives the buyer the opportunity to get a copy of the HOA rules, get a better understanding of their monthly financial burden, and decide if they want to continue with the transaction or back out of the purchase.
#4 Selling Current Home
If you’re in the process of selling your home, but found your perfect dream home you can still get it under contract, just make sure you have the selling your current home clause in the contract. This clause gives the buyer the opportunity to back out of the transaction if they can’t find a buyer for their current home. Many times when people put this clause into the contract they do it because they can’t afford two mortgage payments, and want to use the cash from their sale to put into their new home.
#5 Move In Early Clause
Sometimes people will be between homes for a month or two before all parties are ready to fulfill their contractual obligations. In these cases the buyer can put into the contract a “Move in Early” clause, allowing them to move into the property, and pay rent before the property is closed on. In some cases you can even have the rent deducted from your purchase price, but just be sure to consult with an attorney.