Common Mistakes Made on Home Buying Contracts
When entering into a contract to buy or sell a home, language is everything. Even the slightest word can make a huge difference. Take, for example, the case of Nigel and Christine Gibney and Helen and Randy Pillifant. The Pillifants were selling their home and the Gibneys were contracted to purchase the home. However, there was a stipulation in the buying contract that if the home could appraise for no less than $620,000 in order for the purchase to go through.
The Gibneys had an appraisal done on the house and it came in well below the $620,000 mark. However, the Pillifants had an appraisal on the home and it came in well above the $620,000 mark. But as a result of the low appraisal, the Gibneys chose not to purchase the home which resulted in a lawsuit for breach of contract on the part of the buyers. Because of the language in the contract, the courts had to figure out who was in the right. They eventually decided that the Gibneys were not contractually required to purchase the house due to the one low appraisal. But all of this could have been avoided with proper language. But that’s not the only mistake that buyers and sellers make on home purchasing contracts.
Another thing that should be clearly explained in a home purchase contract but often is left out is a description of the items that are to be left with the house. There are many stories of buyers purchasing a home only to walk into their new home after they buy it and find that the appliances, the chandelier and many other fixtures have been taken by the previous owners. If you want certain items to stay in the home, you should spell it out in the home buying contract before you decide to purchase. But buyers should also be careful and know what the contract says so they can avoid lawsuits and other problems by taking things that were contractually supposed to stay with the home.
Another common mistake is not familiarizing yourself with the date that the contract takes effect. Many home buyers, especially first time home buyers, think that the day they sign the contract is the same day they can move into the home. But in many cases, this is untrue. There is an effective date on the contract which is typically at least a few days after the contract is signed. This gives the previous owner time to move out if they haven’t done so already but it also provides time for title searches, home inspections and other things to get done. Both the buyer and seller should know the effective date to minimize any problems following the closing of the deal.
Finally, if you are buying or selling a home, you should make sure everybody involved in the ownership of the home signs the contract. Is your spouse listed as one of the homeowners? Does any other person or organization have their name on the deed or mortgage? Make sure everybody involved signs the contract or else it could be considered invalid.
Buying or selling a home is one of the most important financial decisions you will ever make. You should never enter into it lightly and always make sure that the contract is clear to avoid any confusion that the courts will have to decide for you later. Having a clear contract can save thousands of dollars in attorney fees and a great deal of frustration, too.
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