| Many buyers have to sell their current house | | | | contract to the Seller, with a letter removing the |
| before they purchase a new one. If you find a | | | | contingency;if the home hasn't been sold yet, but |
| house you love before you sell your current one, | | | | the Purchasers are willing to take a chance that it |
| what do you do? | | | | will sell, they simply present a letter to the seller |
| A contingency is a provision in a real estate | | | | removing the contingency. However, this time the |
| contract which states that if something doesn't | | | | Purchasers will need to present proof that they |
| happen, such as selling your own house or | | | | can afford to purchase the home. This can be in |
| obtaining financing, the contract becomes null and | | | | the form of a letter from the lender stating that |
| void. The standard contingency for selling your | | | | financing of the new home is not contingent on |
| own house would state: | | | | the sale of the current home, or the Purchasers |
| This contract is contingent until 9 p.m. on the ___ | | | | can present evidence that they have sufficient |
| day after the Date of Ratification (Deadline upont | | | | funds in order to close on the new home. |
| the sale of the Purchaser's property located at | | | | No matter how much they want the home, |
| __________). If the Purchaser does not | | | | purchasers would be foolish to remove the |
| satisfy or remove this contingency by the | | | | contingency when they cannot meet either of |
| Deadline, then at any time after the Deadline, but | | | | these two requirements. Otherwise, they are left |
| prior to the Purchaser satisfying or removing this | | | | legally required to purchase the new home |
| contingency, either the Seller or the Purchaser | | | | without having sold their home, or they would be |
| may declare this Contract void by providing notice | | | | in breach of contract. Neither situation is a good |
| to the other party. | | | | one. |
| This language clearly protects the Purchaser. If | | | | This is a dilemma for most homeowners. You |
| you aren't able to sell your own home by the | | | | want to step into a bigger house or move to a |
| deadline, you don't have to buy the new one. | | | | different neighborhood, but can't afford two |
| As you can probably imagine, many sellers do not | | | | houses at once. I don't recommend that anyone |
| want to deal with the uncertainty of such a | | | | who absolutely must sell his current home before |
| transaction. A seller wants to know that they | | | | buy a new one make an offer on a new |
| have a deal or not -- when will the house be sold? | | | | property. |
| To balance this out, there is a compromise | | | | If you aren't sure of your financial situation, go |
| position which is acceptable to many sellers: a | | | | ahead and talk to a mortgage lender before you |
| kick-out clause. With this, the seller accept the | | | | sign a contract. Because sellers are reluctant to |
| buyer's contract which contains a contingency for | | | | accept any contingencies, especially those for the |
| the sale of the buyer's house, but adds language | | | | sale of the purchaser's current home, it is strongly |
| to the affect that if another offer is received, the | | | | recommended that you put your house on the |
| first buyer will have X numbers of days to decide | | | | market and test the waters. |
| whether to "buy or walk". | | | | You never know, your house could be hot, and |
| This is how it is usually stated: | | | | you will quickly sell it. Armed with that contract, |
| The Seller may continue to offer the Property for | | | | you won't have any problem in buying your new |
| sale and accept bona fide back-up offers to this | | | | home. But you should still protect yourself. |
| Contract. If during the term of this contingency | | | | While a real estate sales contract is legally binding, |
| (the sale of Purchaser's present property), a | | | | it is not the same as cash in the bank. Buyers do |
| back-up offer is accepted, the Seller will Deliver | | | | walk away from contracts, with and without |
| notice to the Purchaser requiring that the | | | | justification. If this should happen to you, you can |
| contingency be satisfied or removed not later | | | | get a money judgment against your contract |
| than 9 p.m. on the ____ day after delivry of the | | | | purchaser, but it does nothing to solve the |
| notice, or this Contract will be null and void. | | | | problem of your contract with a seller. They may |
| How do Purchasers remove the contingency for | | | | consider you in breach if you aren't able to |
| the sale of their current home? | | | | comply with the terms of the contract you |
| There are several ways, including:if the Purchasers | | | | signed, leaving you open for a lawsuit. |
| have been successful and obtained a sales | | | | So, if you are able too, sell your house. Then buy. |
| contract on their home, they give a copy of that | | | | |