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Know What Conditions are Essential in an Offer

Know What Conditions are Essential in an Offer

When doing up an offer it is important to know which clauses to use in the Agreement of Purchase & Sale.  Knowing the right conditions will help protect you from any unforeseen challenges you don’t want.  Some of the more critical conditions to consider are:

Financing – unless you have written confirmation from your bank guaranteeing funds or 100% sure you can get the money from your savings on closing, it is best to use this condition.  If the funds are not readily available you potentially set yourself up for legal action if the transaction does not close.

Home Inspection – this is important as it can save you money in the long run.  Ensure that you hire a qualified contractor/inspector.  They know what to look for and are a great source of information especially if you walk around with them during the inspection.

Building permit – if you are purchasing a vacant lot or a tear down, you will want to make sure you can build your dream home.  Putting a clause in the offer will give you time to check with the municipality.

Insurance – this clause is becoming more and more important.  Insurance companies can refuse to ensure homes if they have wood fireplaces (unless inspected and meet code), knob & tube wiring (unless replaced), lead pipes (depending how much lead), unsafe drinking water (all properties on wells must be tested prior to closing), etc.

Remember that these clauses are put in to protect the buyer in case there are any problems with the property.  It is not to give them an out if they get cold feet.  Once an Agreement of Purchase and Sale is signed it is a legal contract and the buyer has shown good faith and sincerity by giving a deposit.  However, there are times when it is necessary for buyers to back out of an offer – the reason these conditions are so important.

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