Addendum To Purchase Agreement Inspection Contingency

A real estate transaction usually begins with an offer: a buyer makes an offer to purchase from a seller who can either accept or reject the proposal. Often, the seller responds to the offer and negotiations come and go until both parties reach an agreement. If one of the parties does not accept the terms, the offer expires and the buyer and seller take their separate channels without further obligation. However, if both parties agree to the terms of the offer, the buyer makes a serious deposit of money – a sum paid as proof of faithful faith, usually 1% or 2% of the sale price. The funds are held by a trust company as the closing process begins. A financing quota (also known as a “mortgage quota”) gives the buyer time to apply for and obtain financing for the purchase of the property. This provides significant protection to the buyer who can withdraw from the contract and recover his or her serious money if he is unable to obtain financing from a bank, mortgage broker or other type of credit. An emergency clause in a real estate transaction gives the parties the right to opt out of their contract in certain circumstances negotiated between the buyer and the seller. Sometimes an emergency clause is linked to an offer to buy real estate and included in the real estate contract. In essence, an emergency clause gives the parties the right to withdraw from the contract in certain circumstances to be negotiated between the buyer and the seller. Contingencies can be details such as the time period (z.B.

“The buyer has 14 days to check the property”) and certain conditions (z.B. “The buyer has 21 days to obtain a 30-year conventional loan for 80% of the purchase price at an interest rate of no more than 4.5%”). Any emergency clause must be clearly stated so that all parties understand the conditions. If the conditions of the emergency clause are not met, the contract becomes null and void, and a party (usually the buyer) can withdraw without any legal consequences. Conversely, if the conditions are met, the contract is legally enforceable and a party would be against the contract if it decided to withdraw. The consequences vary, from the effect of serious money to complaints.