PROPERTY CONTRACT SUSPENSIVE CONDITIONS
If your
offer says "this offer is contingent upon (or subject to) a certain
event," you're saying that you will only go through with the purchase if
that event occurs. Almost every sale contract will have at least one “Subject
to” clause.
Below are the common contingencies contained in a purchase offer:
Buyer Finance Contingencies
The buyer obtaining specific financing from a lending institution: If the loan can't be found, the buyer won't be bound by the contract. The sale is therefore subject to the buyer getting a bond.
This clause is quite common as almost every buyer will have to get a bond in order to purchase. A good way to make this work for both buyer and seller, is for the buyer to have a Bond Originator get them pre-qualified prior to making offers.
Inspection Contingencies
A purchase offer can include a contingency clause that allows the buyer to hire a home inspector or professional expert to inspect the property. If there is a significant defect in the property, the buyer can cancel the contract without being in breach.
The time period for inspection contingencies is negotiable but a common period the buyers have is about a week in which to perform the inspection and allow cancellation the contract if the structural inspection reveals a serious and consequential defect.
The positive side to such contingencies is that the inspection usually addresses - and overcomes any misgivings the buyer might have, and confirms their decision to move ahead with the purchase.
Prior Sale Contingencies
The buyer successfully selling their own home first and by a certain date. ALWAYS make sure that there is a cut off date that is reasonable.
For obvious reasons, most sellers are not too happy about this type of clause, as the property might not get sold and then they have to begin their marketing all over again. As a seller, they should consider the market value of the home being sold vs the asking price – make sure there is a good chance of it actually being sold. Ask your agent to give you their advice.
Most sellers will also ask for an “Escape Clause” to be added – In the event of a better offer being received in the interim.
Repair Contingencies
These are most often repairs that have to be undertaken by the seller by a certain date – normally prior to lodgement. The clause would then read that the sale is subject to repairs x, y and z being undertaken by the seller by such and such a date.
Sellers be warned – If you agree to repairs, do them and do them satisfactorily. If you do not, the sale will fall through and all those involved, banks, attorneys and agents will come knocking at your door for compensation of costs incurred.
Below are the common contingencies contained in a purchase offer:
Buyer Finance Contingencies
The buyer obtaining specific financing from a lending institution: If the loan can't be found, the buyer won't be bound by the contract. The sale is therefore subject to the buyer getting a bond.
This clause is quite common as almost every buyer will have to get a bond in order to purchase. A good way to make this work for both buyer and seller, is for the buyer to have a Bond Originator get them pre-qualified prior to making offers.
Inspection Contingencies
A purchase offer can include a contingency clause that allows the buyer to hire a home inspector or professional expert to inspect the property. If there is a significant defect in the property, the buyer can cancel the contract without being in breach.
The time period for inspection contingencies is negotiable but a common period the buyers have is about a week in which to perform the inspection and allow cancellation the contract if the structural inspection reveals a serious and consequential defect.
The positive side to such contingencies is that the inspection usually addresses - and overcomes any misgivings the buyer might have, and confirms their decision to move ahead with the purchase.
Prior Sale Contingencies
The buyer successfully selling their own home first and by a certain date. ALWAYS make sure that there is a cut off date that is reasonable.
For obvious reasons, most sellers are not too happy about this type of clause, as the property might not get sold and then they have to begin their marketing all over again. As a seller, they should consider the market value of the home being sold vs the asking price – make sure there is a good chance of it actually being sold. Ask your agent to give you their advice.
Most sellers will also ask for an “Escape Clause” to be added – In the event of a better offer being received in the interim.
Repair Contingencies
These are most often repairs that have to be undertaken by the seller by a certain date – normally prior to lodgement. The clause would then read that the sale is subject to repairs x, y and z being undertaken by the seller by such and such a date.
Sellers be warned – If you agree to repairs, do them and do them satisfactorily. If you do not, the sale will fall through and all those involved, banks, attorneys and agents will come knocking at your door for compensation of costs incurred.
Go back to Legal main page, Seller Section or Buyer Section
Read more on Why to appoint a Selling Agent
