| A real estate sale is usually initiated by an | | | | brought up by inspections. It is crucial to |
| offer from the buyer to the seller, written | | | | get inspections done, deliver repair |
| on a real estate contract form, and backed by | | | | requests, and negotiate contract amendments, |
| a monetary deposit. If the seller accepts | | | | or, if necessary, terminate the contract, all |
| the offer, the buyer and the seller are bound | | | | within the time guidelines set by the |
| by a legally binding contract. While the | | | | contract.Contingency for Sale of Other |
| forms vary by locality, the essential terms | | | | PropertyIn some cases the buyer may have a |
| include the offer amount, legal description, | | | | contingency for the sale of a certain |
| names of the parties, and date of closing. | | | | property, usually the buyer's current home. |
| In addition to these terms, the contract | | | | If this property does not close by a certain |
| interweaves numerous contingencies, | | | | date, the buyer may have to terminate. As |
| disclosures of information, and procedures | | | | with other termination procedures, giving |
| that dictate responsibilities of buyer and | | | | notice to the seller within the required time |
| seller. The contract is the road map that | | | | is critical. By allowing this type of |
| takes you all the way through to closing. It | | | | contingency the seller has accepted the risk |
| is very important to understand its terms and | | | | that the contract may not close.Lead Paint |
| follow them carefully. If it becomes | | | | ContingencyFederal law requires that sellers |
| necessary to terminate the contract, your | | | | of homes built prior to 1978 notify the buyer |
| close adherence to contract terms and | | | | of any knowledge or inspections that they may |
| procedures is critical.Loan ContingencyYour | | | | have regarding lead paint. The buyers are |
| contract may contain a provision that the | | | | allowed a period of time to review materials |
| buyer must be approved for a specific | | | | and conduct their own inspections. If lead |
| mortgage loan and interest rate. If the | | | | paint is found, the buyer may terminate the |
| mortgage cannot be obtained within the | | | | contract within the prescribed time frame.We |
| prescribed time, the buyer may terminate the | | | | have touched on the most common termination |
| contract and receive a refund of deposit. If | | | | clauses in standard real estate contracts in |
| it becomes necessary to terminate under this | | | | Texas. Contracts used in other states, or |
| contingency, you should be prepared to | | | | provided by builders for new homes, or |
| document that you took prompt action to | | | | written by an attorney for a particular |
| obtain the loan, received a written | | | | transaction will vary greatly in the |
| rejection, and gave notice to the seller | | | | contingencies and terminations clauses |
| within the time limit set by the | | | | included. In addition, there may be ways to |
| contract.Termination based on credit | | | | terminate your particular contract, other |
| disapproval is likely to cause anger and | | | | than through contingency clauses.The |
| disappointment on the part of the seller. | | | | important thing to remember is that the |
| The seller may feel that he has been misled | | | | contract of sale is of primary importance to |
| into signing a contract with an unqualified | | | | the real estate transaction. If you follow |
| buyer. When anger and strong emotions enter | | | | the terms of the contract and act within time |
| into the transaction they may lead to | | | | limits, you may exercise the termination |
| difficulty in resolving the termination.Title | | | | rights that the contract contains. If you |
| and Survey ReviewContracts usually provide a | | | | fail to follow the terms, most contracts |
| title review period for the buyer. The buyer | | | | state that you have waived the right to |
| may object in writing to defects noted in the | | | | terminate.After you have given the seller |
| title documents. If title defects cannot be | | | | notice of termination, two closely related |
| cured, you have the right to terminate.In the | | | | steps must follow: The parties must formally |
| same vein, the buyer usually has the right to | | | | terminate the contract, and the earnest money |
| review a survey of the property. If | | | | deposit must be released. If the buyer and |
| construction is found to overlap building | | | | seller agree to the termination, their |
| lines, or if there are encroachments on the | | | | agreement is usually formalized by signing a |
| property, you may choose to terminate your | | | | termination form. In Texas we have an |
| contract. | | | | "earnest money release" form that handles |
| | | | both steps - it releases the parties from |
| It is worthwhile to promptly consult an | | | | further obligations under the contract, and |
| attorney if you have some concerns about the | | | | instructs the escrow company to give the |
| title documents or survey. Your objection to | | | | deposit to one party or the other. It is |
| title or survey problems must be made in | | | | usually in the best interest of all parties |
| writing within the time frame allowed by the | | | | to resolve the earnest money and contract |
| contract.Review of Seller's DisclosureIn | | | | termination issues as soon as possible.If the |
| Texas, sellers (with some exceptions) are | | | | buyer and seller cannot agree that the |
| required by law to provide a seller's | | | | contract is terminated, the matter could lead |
| disclosure notice to the buyer. On this | | | | to prolonged negotiation and possibly, |
| form, the seller answers questions and | | | | litigation. In most cases, it is in the |
| provides information about the property. If | | | | seller's best interest to have formal |
| the buyer receives the form after the | | | | termination of the contract, freeing him to |
| contract has been created, he may terminate | | | | put the property back on the market. |
| the contract within a certain number of days | | | | However, occasionally, even when it is clear |
| after receiving the seller's disclosure. The | | | | that the buyer has followed contract |
| receipt date of the disclosure should be | | | | procedures, the seller may prolong the formal |
| documented in order to establish the start | | | | termination process. The seller may want to |
| date of the review period. Be careful to | | | | receive compensation from the buyer for the |
| avoid confusion about when a time period | | | | delay in selling the property. Buyer and |
| starts running.Mandatory HOA ReviewIn areas | | | | seller may have conflicting points of view of |
| where there is a mandatory homeowners | | | | the issue. The non- settlement of |
| association, the Texas contract allows the | | | | termination issues can result in additional |
| buyer a period of time to review Subdivision | | | | time and money, and cause unwanted |
| Information. This information is normally | | | | stress.Most buyers do not enter a real estate |
| supplied by the HOA manager after the | | | | contract with the intention of terminating. |
| contract is created. After receipt, the | | | | However, buyers must not take for granted |
| buyer has the right to review the documents, | | | | that all will go as expected. If a |
| and possibly terminate the contract. Again, | | | | contingency date lapses, you will lose the |
| the termination notice must be given within | | | | benefit and protection of the contingency. A |
| the time limits in the contract.Inspection | | | | good Realtor, in addition to helping you find |
| ContingencyContract procedures to allow the | | | | the property, can be invaluable in helping |
| buyer to conduct inspections of the property | | | | you to meet your obligations under the |
| vary from region to region. In some areas, | | | | contract and, if necessary, exercise your |
| the buyer may terminate if repairs exceed a | | | | right to terminate.Disclaimer: This article |
| pre-agreed dollar amount, and seller declines | | | | is provided as a service to the public. |
| to make the additional repairs. In Texas, | | | | Nothing in this article is intended to serve |
| the buyer is allowed an "option period," | | | | as legal advice, or as a substitute for legal |
| during which time he has the unrestricted | | | | advice tailored to your specific situation |
| right to terminate the contract. | | | | and jurisdiction. If you have a question |
| Inspections are done within the option | | | | about an issue discussed in this article, you |
| period.Inspection issues are the most common | | | | should consult an attorney directly.Roselind |
| reason for contract termination. During the | | | | Hejl is a Realtor with Coldwell Banker United |
| inspection period, there is usually some | | | | in Austin, Texas. Her website - - offers |
| re-negotiation of the price or terms in order | | | | homes for sale, market trends, buyer and |
| to resolve repair issues that have been | | | | seller guides. |