Page 15 - Boca Club News - January '22

Boca Club News, Page 15
Legal: Contract Contingencies

By Michael J Posner, Esq., a partner almost all As-Is Purchases. In exchange for accepting the is $500,000, an appraisal of $450,000 would mean that a
in Ward, Damon, Posner, Pheterson property as-is, the buyer is able to obtain an inspection buyer has to put down an additional $40,000 to fund the
& Bleau, P.L. a mid-sized real and, during the inspection period, cancel the contract due shortfall. If you are waiving the contingency this factor
estate and business-oriented law to the results of said inspection (or for any other reason must be considered.
firm serving all of South Florida, in buyer’s sole discretion). Traditionally, there were not In addition, I recommend that a provision be added
with three offices in Palm Beach inspection contingencies in real estate contracts. Instead, to the contract that states that the buyer’s appraiser will
County. They specialize in real buyers would obtain an inspection and the seller would be have access to the property during the term of the contract,
estate law and can assist sellers obligated to make repairs found in the inspection report as we have seen sellers refusing to provide access under
and purchaser with closing and to a financial cap of 2-3%, and if the cap was exceeded contracts that are “cash transactions.”
financing of residential and commercial real estate. either the buyer or seller could cancel the contract. Title Contingency: Sellers must provide marketable
They can be reached at (561) 594-1452 or at mjposner@ In today’s competitive market, sellers are either title to prospective buyers in order to close on the sale.
warddamon.com offering short inspection periods of 7 to 10 days instead of This means that any title defects must be corrected in order
The real estate market in South Florida, as well as the traditional 15-day inspection period, or even waiving for this contingency to be waived. This includes payment
across the United States, continues to be extremely inspections altogether. While sellers are obligated to of all mortgages and past due taxes, and compliance with
volatile, with high demand and low supply. I personally disclose known material defects in condition that would all code enforcement and Association liens, assessments,
have been looking to find a second home in Fort Myers for affect the value of the property, closing without an and violations. If a defect in title prevents the seller from
over nine months and have been frustrated by the limited inspection is extremely risky as there could be many minor being able to close, the standard contract gives the seller
number of houses available to consider in our price range defects which, in and among themselves, would not affect an additional thirty days after the closing date to cure the
and with our specific needs. value but could collectively cost substantial sums to repair. defect. If the defect cannot be cured, the buyer has the
We finally located a house that we would consider, but Shorter inspection periods may result in the inability to right to terminate the contract and receive the return of
it was both over our budget and missing certain features, obtain a quality inspection due to the limited availability the buyer’s deposit.
such as a swimming pool and hurricane protection. We felt of inspectors at any given time. Understanding contractual contingencies and the risk
that if we could get price concessions, we could always Financing Contingency: In my own purchase, I knew of waiving any contingency is crucial in this difficult
add the additional items even though that would, of course, that the seller would not consent to a financing contingency. buyer’s market. No contingency should be waived
push the expense of the house even higher. With no other The standard financing contingency gives the buyer thirty without planning and understanding of the risks involved.
houses available, we decided to take the plunge and make days to obtain approval for a mortgage loan. Approval is Otherwise, a buyer could end up losing the deposit or
an offer on the house and hope that the buyer would come based on a number of factors including the buyer’s down buying a property with substantial imperfections or title
down enough to make it worthwhile for us to purchase. payment amount, source of funds, income, credit score defects that will cost the buyer substantial sums to cure.
After our first contract offer was rejected, we received and the appraised value of the property. Any one of these
feedback from the seller that certain contingencies would factors can cause a lender to deny a loan to a buyer. If
not be accepted as part of any offer. They told us that the lender denies the loan, the buyer may terminate the Advertise,
they had entered into two contracts for the home, both of contract and receive the return of their deposit.
which had been canceled due to contractual contingencies. Waiving the financing contingency does not mean
Therefore, they would not accept any offer with any that a buyer cannot obtain a mortgage loan to purchase Check out our website!
contingencies other than a short inspection contingency. the property. It simply means that the contract is not
A contingency is any contractual agreement that makes contingent on the buyer obtaining financing, and if the
proceeding by buyer or seller under a contract contingent loan is denied the buyer is still obligated to close or risk www.seabreezepublications.com
on a future event. There are both common and unusual losing their deposit. Assuming a buyer is comfortable
contingencies in real estate contracts. The most common on their ability to obtain a mortgage loan based on their or call 746-3244.
contingencies are described below, but many other income and credit (or willing to pay cash if necessary),
contingencies can be agreed to, and we will explore those the only risk to waiving the financing contingency is the
in my next column. appraised value of the property. For example, if a buyer is :
Inspection Contingency: Today’s contracts are financing 80% of a home’s value, and the purchase price

Serving over 112,000 satisfied customers since 1976

Boca Raton • 10% Off All Your
And
South Florida’s Plumbing Repairs
Largest Plumbing
Service Company! • Boca’s #1 Service
Plumber For 46 Years
- LEAK DETECTION Since 1976
Residential & Commercial in walls or under slab
(up to 12 feet underground) • Rated A+ With BBB
- TUNNEL EXPERTS
We Dig Tunnels Under Buildings & Houses to • Tunnel Experts
Replace Your Water or Sewer Lines - No need to
leave your home! We DO NOT cut your floors • Leak Experts
20% OFF - TOILET REPAIRS • Saturday & Sunday

GARBAGE DISPOSALS - WATER HEATER – No Extra Charge
SB REPLACEMENTS (9 A.M. To 4 P.M.)

20% OFF and Much More! • Repair Or Replace Toilets

TOILET REPAIRS OR RESIDENTIAL 10% OFF
TOILET STOPPAGES • Repair Or Replace
SB
All Plumbing Repairs Water Heaters Or

$ 100 OFF Garbage Disposals

A+ Rated (BBB)
ANY NEW TOILET Florida Licensed and Insured • Backflow Repairs Or
With Installation SB CFC1427238 -CG1508546
Certifications
Weekend Service
$ 100 OFF AT NO EXTRA CHARGE • Faucet Repairs Or
9am - 4pm

ALL WATER HEATERS Help Is Replacements
100% SATISFACTION
SB GUARANTEED! Only A • We Will Install Your

561-279-2460 Boca Raton Call Away! Plumbing Fixtures