A simple contingency written into your contract can assure you of special protection in a home-buying situation. Principal Law has stated previously that you should have a real estate attorney represent you when you buy a home. Insure this influence by including a contingency for your attorney’s review of the contract before it becomes binding.
Hiring Your Real Estate Attorney Long Before there is a Contract or a Contingency
Principal Law believes that you should rely on your real estate lawyer from the beginning of your home-buying adventure. With his or her help you will learn about the many documents involved in home-buying. And this should understood before you submit an offer on that dream home. These papers relate to several crucial aspects. As we have noted previously, there is a veritable paper storm of documents involved in buying a home. Among the many documents, you will need to understand are papers that refer to:
Once you start house hunting or find that dream home, find a Real Estate Lawyer to protect your dream.
- federal, state and local regulations,
- financing,
- your mortgage payment,
- your mortgage insurance and your taxes.
Introducing a Special Contingency in Your Real Estate Contract
The list goes on to include the inspection,
- your deed,
- your title,
- the title search,
- the certificate and
- the title insurance. And more…
The best way to understand all of these papers is with a one-on-one consultation with your own real estate lawyer.
And even if you have only a limited budget, we feel you should hire a real estate lawyer for a review of your purchase and sale agreement. This is also known as your real estate buyer’s contract. Your lawyer should be present for the closing.
A Contingency Statement Built to Protect the Home-buyer
As stated above the easiest legal way you make sure your contract protects you is to have a complete review by your own real estate attorney. Just put the request for your lawyer’s review in your contingencies as a buyer.
If you are interested in buying a home, you probably know a little about contingencies. But we thought a little review of them would be appropriate here.
Caution! Loans can fall through. If yours does, how will you protect you investment?
We basically define the usage of the word contingency as “a future event or circumstance that is possible but cannot be predicted with certainty.”
To put it in perspective, home-buying, contingencies give you a way out of a house-buying situation if certain circumstances arise. And now you know why some old school real estate agents termed contingency clauses “weasel clauses.”
Of course, the document includes such features as:
- the address and description of the home you are buying.
- the earnest money,
- terms of the sale,
- dates of the final walk-through,
- the closing date,
- and the mutually agreed-upon sale price.
A Most Important Contingency
It’s difficult to say that the contingency for a lawyer’s review is the most important one you can have. The others are very valuable. However, an attorney protecting your interests ranks up there with the best. And, as mentioned above, it should include the contingency that your real estate lawyer will review the contract.
And you will want to include other contingencies as well. For our purposes in this article, a real estate contingency is a condition that the sellers must obey in order to make the deal work. And your attorney knows what to look for. And he knows how to protect your rights. (You see, we are looking at the home buying deal from the buyer’s point of view. You should know the real estate agent is truly committed to the seller’s point of view.)
The Home Inspection Contingency
Likewise, a contingency is a requirement without which there will be no sale. For example, you will undoubtedly include a “home inspection contingency.”
This contingency gives home buyers a legal way “out” if they are unhappy with the results of the inspection.”
The Financing Contingency
Let’s face it, home-buyers usually need a mortgage loan to buy a house. This type of purchase contract contingency means that if the mortgage financing falls through, the buyer is not responsible for buying the house. It might happen like this:
As your lawyer oversees, the real estate agent helps you sign. A Happy Moment.
The buyer gets pre-approved. He makes an offer. The seller accepts the offer.
A week later, the lender’s underwriter finds problems with the application file.
Therefore, your loan is denied.
The problem is that mortgages can “fall through” somewhere between the purchase agreement and closing. In such cases, the buyer must exit from the purchase contract. And with this contingency in the contract, he will endure no penalties. Since the deal is contingent on the financing, the buyer exits with his money intact. A real estate lawyer will see to that.
Sale of Current Home Contingency
This contingency is very unpopular with sellers. It states you will buy the seller’s home provided (or contingent on) the sale of your own home. If the buyer is unable to sell his/her current property, he or she thus has a legal way out of the purchase contract.
The Home Appraisal Contingency
Mortgage lenders use home appraisals to see that the property is worthy of the dollar amount the buyer has agreed to pay.
The home might appraise for less than the purchase price. In such a case, your home appraisal contingency gives you the two options. You can renegotiate the purchase price or walk completely walk away from the deal.
The Clear Title Contingency
Basically, the title is a legally binding document that discloses who has owned a home in the past and owns it now. To put it briefly, a title company will check the title to make sure it is “clear” of liens, disputes or other issues.
Happy Family is moving in big boxes with big smiles, into new home.
Title contingencies give buyers a way out of the contract if a problem is found.
Some issues can be solved before the final closing. However, if the problem with a title can’t be fixed, buyers with this contingency can walk away from the real estate deal.
You probably are already aware of at least some of the above contingencies. And you should consider adding some of them to your real estate contract if appropriate. Add them only if needed. Remember, the seller can walk away from the deal if he doesn’t approve your contingencies.
But including a contingency that the contract should be reviewed by your lawyer before it binds you, is less well known. Let’s look at why you need that attorney review.
Including the Contingency for Your Lawyer’s Review
Experts explain, your buyer’s contract offer “can be made subject to a contingency that allows the buyer’s lawyer to approve it before it binds the buyer.”
There are at least two reasons to utilize this contingency.
1. “Protecting a buyer against adverse language.”
2. A “lawyer’s review can guard a buyer against making an offer that a seller’s agent unduly shapes.”
The Contract Contingency Format: Language Added or Deleted?
The contract form is standardized. But you don’t know what type of language might have been added, deleted or enhanced by the sellers. Sometimes it is difficult to remember that “The job and responsibility of the seller’s agent (realtor) is to work to get the best deal for his client—the seller.”
Put Your Lawyer’s Advice Up Front in the Contingencies: Save Grief After the Deal is Done
This relationship between sellers and realtors is why we have seen buyers become embroiled in lawsuits against real estate agents. In these sad and angry situations, buyers often claim they did not understand that the real estate agent was a direct representative of the seller.
Buyers have complained that because of that relationship, which they did not understand, “one or more terms were included in the contract offer that worked against the buyer’s best interests.” A contingency for the buyer’s lawyer to review the contract will prevent such problems.
Be Informed about Filling in the Blanks of Your Contract
Principal Law wants you to understand that a real estate agent isn’t normally allowed to draft a contract from scratch, “because that would be practicing law.” Keep in mind, however, that “an owner-seller on his or her behalf can do this.”
Experts from the Mortgage Reports explain, according to the law, “States have granted agents the power only to fill in the blanks of a contract that’s been drafted by an attorney. These contracts are standardized for use by all real estate agents.”
However, mysterious things can happen to the original blank contract. Words could be deleted. Or a situation could arise “where an agent’s filling in the blanks plays a critical role. It could not only make or break the deal. bad drafting could also create problems.”
Use That Very Valuable Contingency
Knowing this, you must realize again that there is huge value in having your own real estate attorney. They can protect you from anything the seller or the seller’s realtor slips into the contract or fills into the blanks. Given the relationship between realtors and sellers, it’s easy to see why more and more of today’s savvy buyers are using a lawyer-review contingency in their proposals.
For your Home Buying Review and Fulfillment of the Contingency, Do not Hire a General Lawyer
Principal Law highly recommends that home-buyers “select an attorney who practices real estate law. Put simply, why would you hire an attorney who does not know how to protect you or how to provide solutions to problems that might arise? Look for a Real Estate Attorney.
The Language of a Lawyer’s Review Contingency
Did you know that you as a buyer can add a contingency clause that reads something like one of the following options? These options were published by the specialist at Landthink?
When contingencies work, a smooth contract unites buyer and seller in a fair deal.
1. (For Protection…) “This offer is contingent on the review, possible modification, and approval of this offer by the buyer’s attorney to take place within 7 business days of its submission to the seller.”
This contingency allows a lawyer’s review and alteration before to submitting a final version to the seller. It simply and clearly involves the buyer’s lawyer in the offer-drafting process.
2. (For Strategy…) “This offer is contingent on its review and approval by the buyer’s attorney to take place within 7 business days of the last required signature being affixed to this proposed contract.”
This second option allows a buyer to void an accepted offer if his lawyer objects to some provision. Likewise, due to the language, the buyer can void the offer if he or she has a change of heart about the deal. If handled correctly, either option can lead to negotiations so that the objections can be resolved.
However, if option 2 is used, the seller could become defensive. So the buyer should carefully define his intentions and possibly share some concerns. He should explain the possibility that he suspects the lawyer might find a deal-breaker problem.
Final Thoughts on the Lawyer Review Contingency
On the one hand, a lawyer review contingency, like other contingencies can be used simply and protectively. On the other hand, it can be used as a strategy to change the terms of an offer after the seller has invested in a deal. We believe the lawyer-review contingency is at its best when used to protect a buyer’s interests. And it is far from the best when used to enhance a deal at the last minute. In its purest form, the contingency for a Lawyer’s Review of your contract can be thought of as the contingency that protects all your other contingencies.
