Buying Laguna Beach Real Estate? Protect Yourself With Contingencies

Anyone who’s seen a real estate purchase contract knows how complex the affair can be. The biggest danger in this is getting trapped in a commitment you don’t agree with: the home can turn out to be a fixer-upper, the market value may turn out lower than expected, or your buyer may not qualify for a loan. If you’re entering a contract, make sure to have the right contingencies in place.



What are contingencies?



Contingencies used to be called weasel clauses because they let you escape, or "weasel out," of a contract without being penalized. If you decide to walk away, you will get your deposit back in full and have no obligations left to the other party. In Laguna Beach real estate, contingencies allow you to cancel if the seller fails to do his part or if the process turns up facts that aren’t up to your expectations.



Common contingencies



Each state has its own mandatory contingencies, but some are universal or at least very common. In California, whose real estate laws are similar to most, the most common include:



Appraisal: Lenders will want an appraisal of the home, usually at the buyer’s expense, to see that the purchase price matches the home’s market value. They want to make sure they aren’t lending out more than they should for a Laguna Beach home. An appraisal contingency allows you to cancel if the home appraises for less than your initial offer.



Inspection: This is one of the most important contingencies in Laguna Beach real estate. It gives you the right to have the home professionally inspected (either at your expense, the seller’s, or split between the two), request repairs from the seller if necessary, and cancel the contract if you’re simply not happy with the results. Separate contingencies allow you to check for specific problems such as roof damage, lead-based paint, asbestos, mold, radon, and wood-destroying pests.



Loan: Most Laguna Beach home buyers enter the market already pre-approved, but this does not ensure final approval. Lenders may still deny you the mortgage based on further information obtained on your credit history, your finances, or the home.



Title: You should also require a title inspection to make sure you’re getting a clean title, and that no one’s going to come after you once you’re the legal owner. A title contingency requires full details of the title, including easements, homeowner’s association documents, and any liens on the home. If any details make you think twice, the contingency lets you opt out of the deal.



Selling existing home: You can make the contract contingent on the sale of your current home so you don’t end up responsible for two homes at once. These contingencies usually give you a time frame within which to sell, after which the seller is free to look for another buyer.



Early occupancy: Some contracts involve a written agreement between you and the seller allowing you to rent the home before it goes into escrow. If you want to move in but the paperwork is taking a while, this can be a good addition to your contract.