Understanding the protection provided by a purchase agreement

Many in Santa Cruz may think that once they have found their dream home, all that is left is simply putting in an offer and then waiting to move in. However, the home-buying process is rarely that simple. In many cases, it is only after a party has put an offer on a property that the real work begins. In between the time of making an offer and closing on a home, a buyer and seller must work together to complete the transaction. During this time, the only security a buyer has that holds his or her interest to the home is the purchase agreement

The purchase agreement basically states that in exchange for the buyer offering earnest money, the seller will not then turn around and sell the home to someone else. Yet the buyer protection it offers goes beyond that. It keeps a seller from unloading a home (with all of the problems that may come with it) onto a buyer without any stipulations. Kiplinger’s recommends that all buyers include provisions in their real estate purchase agreements that make them contingent on certain aspects related to the home, such as: 

  • Passing a home inspection
  • Testing for environmental and pest problems
  • Detailing an acceptable condition of the home upon settling

Contingencies that address the aforementioned tasks turn the failure of them into a form of seller default. If such default occurs, not only can the buyer be let out of the contract, but he or she may also be entitled to damages (depending on the point the process that the transaction was at). Other methods through which a seller can default on a purchase agreement include not vacating the premises on time, or he or she not maintaining utilities up through the initial home inspection. 

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