Buying and selling real estate is one of the most significant and expensive transactions for the average American. Considering what is at stake, the buyer or seller wants to make sure they make the right decision. Sometimes they decide something that they later regret. Fortunately, there are several steps to buying or selling property. These are outlined in a contract that is agreed upon by two people who understand the consequences of their actions. The contract conditions can also provide reasons to void or change the deal before it is complete.
Common conditions for voiding a contract
Deals fall apart for many reasons. Some of the most common include:
- Contingencies: Contracts will have conditions that the buyer and seller must meet to conclude the transaction, such as failing an inspection by a property expert or discovering a fundamental flaw that impacts the property’s value.
- Title: Owners cannot transfer the property if there is no clear title. A lien against the property or perhaps lack of title if the property has been in your family for generations will cause problems.
- Financing: Regardless of what the buyer is willing to pay, those using financing need to have the mortgage company or bank sign off on the purchase and price.
- Disclosure: Sellers must provide any known information on the property disclosure form regarding the status of the property. This can range from a crack in a foundation to problems with flooding. Coloradans are not obligated to reveal property stigmatization such as being the site of a murder, suicide or even “haunting.”
- Mistakes: People make mistakes, and often these can be rectified. The contract may be void, however, if both sides make errors on an important issue. It could involve an eminent domain seizure by a local, state or federal authority that neither the seller nor buyer knew about.
- Grace periods: Contracts typically have a one- or two-week period where either party can walk away without penalty or lawsuits.
Contracts protect both parties
One of the above conditions may come to light during the transaction. It can lead to frustration or sadness, but it avoids buyers purchasing or paying too much for an uninhabitable property or one misrepresented somehow. If the seller follows the rules, this can also protect them from a lawsuit after the deal is complete.