If you feel less than certain that you will be
able to go through with the purchase for any reason, you can -
and should - go one step further. Insist on adding an 'escape
clause' to your offer. This allows you to back out of an
agreement without incurring any penalty or disadvantage. This
clause should be already in the 'Offer and Acceptance' form
supplied by your attorney or buyer's broker. If it isn't, ask
him how to add it.
Such a clause might state that you will go through with the
deal, but only if certain other things happen. For example,
you'll complete the purchase provided your partner or mortgage
lender or attorney approves it. Remember, this offer document
is not the full Sales and Purchase Agreement. That will be
drawn up later by your attorney or broker (or approved by him)
if your offer is accepted. And, it will spell out in detail
the conditions attaching to the purchase.
The escape clause (often called a 'contingency' or
'contingency clause') in the Offer and Acceptance document
serves only one purpose, to allow you the right to withdraw
without any cost or further obligation to you. This is a
matter you should cover in your preliminary talk with your
attorney or buyer's broker. At the same time, seek
advice on how to go about putting a deposit on the home you
select. And keep in mind that an offer to purchase can be
withdrawn at any time prior to acceptance, with or without an
escape clause .
When it comes to handing over money, my own approach is one of
caution. Even when protected by an escape clause, I believe
it's wise to give the agent the smallest possible deposit
(sometimes called an earnest money deposit' or a 'good faith'
deposit). This is the money the agent looks for before he
submits your offer. If you decide later to pull out of a deal,
a properly worded contingency clause can guarantee you will
get your money back. Without such a clause, you could forfeit
your entire deposit.
This Homebuyers Tip was excerpted from:
Not One Dollar More!, by Joseph Eamon Cummins, Kells Media
Group, 1995.
ISBN# 0963821598
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