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Contingencies may give you an 'out' when buying a home

When you begin looking for a new home, you probably already realize you will have many documents to sign. You may feel overwhelmed at the amount of legal red tape involved in a real estate transaction. Many of the papers you sign outline your responsibilities to the mortgage lender and provide information about the laws that pertain to your new Indiana home.

Once you find a home that checks off the boxes on your wish list, one of the first documents you will sign is a purchase contract. This legally binding agreement says that you intend to buy the property, and you typically put down a good faith deposit to prove your intentions. However, this does not mean you are stuck buying a home that may end up being wrong for you. It is important that you read your contract carefully and understand the options you have for canceling the sale.

Is something wrong here?

Many home purchase contracts are similar across the country. They include a description of the home and property, the agreed-upon price, and many other details. They also include contingencies, which are conditions under which either you or the seller may back out of the sale. Each state has its own specific contingencies, but in general, someone may cancel the sale under the following circumstances:

  • The appraisal is too low.
  • You are unable to secure financing.
  • The title report reveals easements, liens or other factors that discourage you from buying.
  • You are unhappy with the homeowner association disclosure.
  • You have concerns about the seller's disclosure regarding the condition of the house.
  • An inspection of the house reveals serious defects that the seller will not fix or that alter your confidence in owning the home.
  • You are unable to sell your current home.

These are only examples of the kinds of contingencies a purchase contract may contain. Negotiating a purchase contract is a wise move. The contract contingencies should not be for the benefit of the seller alone. In fact, before you sign any documents related to your real estate transaction, you would be smart to seek the advice of an attorney who has a firm grasp of real estate laws in Indiana. Having an attorney as your ally throughout the homebuying process can prove advantageous and allow you to feel more confident.

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Timothy R. Hayes, Attorney At Law
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