Insurance Contingency Clauses
Contingencies are clauses in a contract that must be fulfilled before a sales transaction for a home closes. They give home buyers an opportunity to cancel a contract without suffering financial penalties, such as the loss of earnest money, in case events do not play out in a certain way. One common contingency is a financing contingency that states a buyer must secure financing for a new home before the sale closes. Another common contingency is for buyers who are trying to sell an existing home before buying another. The contingency permits the buyer to sell his or her current home before buying a new one so that the buyer is not saddled with two mortgages at once. Insurance contingency clauses allow home buyers to back out of a sale if they cannot secure home insurance for the property. The Boston real estate lawyers at Pulgini & Norton can help make sure that your contract includes necessary contingencies.Insurance Contingency Clauses
Many unexpected events may occur during the purchase of a home. Buyers should protect themselves with contingency clauses, which permit them to rescind a contract without paying a penalty in case certain events occur. A contingency clause serves as a loophole or form of protection. Usually, the contract includes an escrow period, a certain amount of time between the dates the contract is signed and the "closing." The clause will also specify when and how a notice of cancellation should be given and received. Having your own attorney during the process of negotiations can help ensure that the required contingency clauses are included and that you stay on schedule to meet various conditions.
During the period of escrow, you and the seller likely will try to meet to remove contingencies and communicate about your progress. If either party is unable to meet a contingency, the purchase can be called off, or further negotiations can be held around whatever is holding up the deal.
It is common for a home purchase contract to include multiple contingencies. Once the closing happens, the purchase is complete, which makes it especially important to determine which contingencies you need before signing a contract and including them in the contract. The seller may also have various contingencies included in the contract.
For example, lenders may require you to get fire and hazard insurance before approving your home loan. In some cases, insurers will not offer insurance for a particular property due to its geographic location and past problems in the area. If you are not able to secure this insurance, it is important to have an insurance contingency clause in the purchase contract. An insurance contingency clause will clearly express that if you as the buyer cannot get insurance for the property, the purchase contract terminates. Generally, the contract makes the closing contingent on your receiving a commitment for insurance in writing. Without such a clause, you could get stuck buying a home without the possibility of insurance or a mortgage, if insurance is required to secure the mortgage.Explore Your Options with a Boston Property Transactions Lawyer
For many people, buying a home is among the most important and expensive purchases of their lives. When you are arranging for a home purchase in the Boston area, an experienced real estate attorney may be vital in protecting your interests. At Pulgini & Norton, we also represent people in Malden, Newton, Hyde Park, and other cities in Massachusetts. Call us at 781-843-2200 or contact us via our online form for a free consultation.