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When you begin the process of buying or selling a home, you should include standard conditions within the purchase contract. Another option is to include unique conditions that are specific to your circumstances. The typical action in a purchase contract if a condition is not met allows one of the parties to withdraw from the contract if another doesn't meet the contracted condition. At that time, deposits are returned and the contract is void.
Must-Have Contingencies
You should include these three contingencies in any purchase contract:
Financing: Buyer or seller can back out if loan is not approved.
Inspections: Buyer can back out if inspections of property condition, pests, lead, radon levels, or the neighborhood itself are unsatisfactory, and if the buyer and seller can't agree on remedies.
Title: Buyer can back out if property title is unclear.
Other Common Contingencies
Right of review (for common-interest developments or cooperatives) Buyer can back out if master deed, bylaws, budget or conditions, covenants and restrictions are unsatisfactory.
Contingent sale: Buyer or seller can back out if buyer's current home fails to sell within a certain time limit.
Insurance: Buyer can back out if unable to obtain homeowner's insurance.
Disclosures: Buyer may be able to back out if seller fails to disclose such issues as earthquake hazard, flood hazard, lead (in homes built before 1978) or, in states where required, other material facts or defects about the property.
Repairs: Buyer can renegotiate or may be able to back out altogether if agreed-upon repairs are not satisfactory.
Final construction approval (new homes): Buyer must approve finish work if construction is not completed before purchase contract is signed.
Contract review: Buyer or seller has right to have the contract reviewed and approved by an accountant or attorney before sale can move forward.
This information was compiled from www.MSN.com's House & Home.
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