Buying real estate, whether for your primary residence, for a commercial venture or as an investment, will likely be one of the most expensive and complex purchases you will make in your lifetime. Because of the high risk for both parties, you can expect to read and sign mounds of documents, including a sales contract. A sales contract is your legal agreement to purchase a property and the seller’s promise to protect the property and follow through with the sale.
Since the purchase of real estate is a transaction that often takes months, anything might happen in the time between signing the contract and closing on the sale. In fact, you should be aware that there are a number of things that can make that solid legal contract void.
Read the fine print
Voiding a real estate contract might not be a bad thing, especially if something changes that is not in your favor. That is why most contracts contain contingencies. Contingencies are part of many contracts as a back door out of the deal when it is no longer satisfactory to one or the other party.
For example, your contract probably has a contingency that the property must pass a professional inspection. Therefore, if the inspector finds a fundamental flaw in the structure of the building, you can walk away from the deal without legal ramifications. You can include a variety of contingencies in your contract for your protection, but the other party can do the same. Some other factors that may void a contract include the following:
- The title of the property will not clear, perhaps because of unresolved liens or questions about the property’s ownership.
- Your financing falls through, or you cannot obtain a mortgage for the interest rate you need.
- New information arises that neither party knew at the time of the signing, such as local authorities planning a new highway close to the property.
- The seller violates North Carolina law by failing to disclose material flaws that will affect your ability or desire to purchase the property, such as the existence of lead paint.
- An unexpected emergency arises, such as the sudden illness or injury of one party.
Your real estate agent may prepare the contract, but the seller may want to add or remove certain contingencies. It is wise to carefully read and review before you sign any contract, especially the fine print. You will want to seek the advice of a legal professional to protect your best interests throughout the process.