Most of the time the sale of a Home goes smoothly; but what if it doesn’t? When a Buyer makes an offer and the Seller accepts, absent some unmet condition, the parties have a binding contract. It can sometimes get lost in the excitement of a home purchase that the reality is you are contracting for a major six-figure purchase/sale. What if a Buyer or Seller wants out of a binding contract?
Part II: What About Those “Contingencies”?
Once you have a binding contract and either you want out of the contract, or the other party wants out, before you take any action, review the contract closely to see if there are any conditions that might allow you to simply walk away.
Sometimes a contract is not binding until a condition has been met that triggers a duty to perform -close in the sale/purchase- under the contract. This condition is known as a condition precedent. The most standard condition precedent in real estate purchase agreement is related to financing where a buyer’s offer is typically conditioned upon buyer obtaining reasonable financing for the purchase- the exact terms of what is “reasonable financing” can be negotiated.
Sometimes a contract is binding; however, if some condition occurs, such occurrence discharges a party from performing under the contract. This condition is known as a “condition subsequent” A typical condition subsequent would be related to the buyer obtaining an environmental inspection prior to closing; if it turns out that the inspection is unfavorable the Buyer no longer has a duty to go through with the close on the purchase of the home.
In this series, we will be looking into the following:
- Part 1: The Real Estate Sales Agreement is a Contract
- Part 2: What About Those “Contingencies”?
- Part 3: If No Contingencies Provide a Way Out – Then What? (If you are the Party Wanting to Close on the Home)
- Part 4: If No Contingencies Provide a Way Out – Then What? (If You are the Party Wanting Out)
- Part 5: Conclusion
By Real Estate Attorney Jeshua T. Lauka.
Jeshua is an attorney at David & Wierenga, P.C., a business law firm located in downtown Grand Rapids, Michigan. Jeshua practices in business, real estate, estate and trust work and related litigation. Jeshua has developed a focus on representing corporate and individual clients in distressed/foreclosure-related real estate matters, whether it is a corporate or construction industry client renegotiating a loan, or homeowners faced with being forced out of their homes.