Video: What are Real Estate Escape Clauses?
Friday Aug 28th, 2020
What are Real Estate Escape Clauses
Most real estate contracts contain contingency clauses that allow the buyer or seller to end the transaction without a penalty if certain conditions cannot be met. These are commonly referred to as “escape clauses.” Here are the three most common real estate contingencies that include escape clauses:
- A home inspection contingency gives the buyer the right to have the home inspected within a specified time period. This protects the buyer by allowing them to cancel the contract or negotiate repairs based on the findings of a professional home inspector.
- A financing clause stipulates that the offer is contingent on the buyer obtaining financing on the property within a set period of time and delivering a written loan commitment to the seller.
- In cases where the buyer must sell their current home first, a home sale contingency gives the buyer a specified amount of time to sell and settle their current home to finance the new one.
Escape clauses protect both buyers and sellers. Consult with your REALTOR to ensure that the appropriate clauses are included in your agreement.