Real estate transactions in Ann Arbor and Dexter often involve unique challenges due to the diverse properties in these markets. From historic homes in Ann Arbor’s Old West Side to sprawling rural estates in Dexter, contingencies play a critical role in protecting buyers and sellers. Here’s a breakdown of the 20 most common contingencies in local transactions, their purpose, and why they’re particularly relevant in these areas.
1. Home Inspection Contingency
Purpose: Allows the buyer to hire a professional inspector to evaluate the property for issues like structural damage or faulty systems. Relevance: Ann Arbor’s older homes, especially in historic districts, often have hidden problems. Outcome: Buyers can request repairs, negotiate the price, or cancel the contract.
2. Appraisal Contingency
Purpose: Ensures the home appraises at or above the agreed purchase price. Relevance: In competitive Ann Arbor markets, buyers often bid above asking, risking a lower appraisal. Outcome: Buyers can renegotiate or terminate the deal if the appraisal falls short.
3. Financing/Mortgage Contingency
Purpose: Gives buyers time to secure a mortgage. Relevance: Especially important for first-time buyers who may face loan approval delays. Outcome: The deal proceeds only if the buyer secures financing.
4. Sale of Current Home Contingency
Purpose: Makes the purchase contingent on selling the buyer’s current home. Relevance: Dexter buyers often rely on selling their existing home to fund the purchase. Outcome: If the buyer’s home doesn’t sell, they can withdraw from the contract.
5. Title Contingency
Purpose: Verifies the property is free of liens or encumbrances. Relevance: Essential in rural Dexter, where unclear boundaries or easements are common. Outcome: Issues must be resolved before closing, or the buyer can cancel.
6. Homeowners Association (HOA) Review Contingency
Purpose: Gives buyers time to review HOA rules, fees, and bylaws. Relevance: Common in Ann Arbor condo communities like Ashley Mews. Outcome: Buyers can withdraw if HOA terms are unsatisfactory.
7. Radon Inspection Contingency
Purpose: Tests for radon, a harmful gas found in basements. Relevance: Prevalent in older Ann Arbor homes. Outcome: Sellers may need to install a mitigation system if levels are high.
8. Sewer/Septic Inspection Contingency
Purpose: Ensures the sewer or septic system is functional. Relevance: Crucial for rural Dexter homes with septic systems. Outcome: Repairs or negotiations may be necessary if issues arise.
9. Water Quality/Well Inspection Contingency
Purpose: Tests water quality and flow rate in homes with wells. Relevance: Many Dexter properties rely on private wells. Outcome: Contaminated or insufficient water systems must be resolved.
10. Lead-Based Paint Inspection Contingency
Purpose: Checks for lead-based paint in homes built before 1978. Relevance: Historic Ann Arbor homes often contain lead-based paint. Outcome: Mitigation may be required, or buyers can walk away.
11. Termite/Pest Inspection Contingency
Purpose: Ensures the home is free of termites or pests. Relevance: Older homes in wooded areas near Dexter are more prone to infestations. Outcome: Buyers can negotiate repairs or cancel if pests are found.
12. Environmental Hazard Contingency
Purpose: Tests for mold, asbestos, or underground storage tanks. Relevance: Especially important in rural areas of Dexter. Outcome: Hazardous issues must be resolved before closing.
13. Survey Contingency
Purpose: Confirms property boundaries. Relevance: Vital for rural properties with large lots or shared driveways. Outcome: Discrepancies must be addressed, or buyers can withdraw.
14. Occupancy Contingency
Purpose: Specifies when the seller must vacate. Relevance: Fast-moving Ann Arbor markets often require flexibility. Outcome: Agreements are made for move-in dates or rental terms.
15. Escrow Holdback Contingency
Purpose: Holds part of the sale price in escrow until repairs are completed. Relevance: Useful for winter sales when outdoor repairs are delayed. Outcome: Funds are released after repairs are verified.
16. Contingency for Repairs
Purpose: Specifies repairs the seller must complete before closing. Relevance: Common in older Ann Arbor properties needing visible updates. Outcome: Repairs must meet buyer approval, or they can renegotiate.
17. Zoning and Permit Contingency
Purpose: Ensures compliance with zoning laws and permits. Relevance: Critical in Ann Arbor, known for strict zoning regulations. Outcome: Non-compliance issues must be resolved.
18. Condo/Co-op Document Review Contingency
Purpose: Allows review of financial and governance documents. Relevance: Essential in Ann Arbor’s condo-heavy downtown. Outcome: Buyers can cancel if documents reveal concerns.
19. Insurance Contingency
Purpose: Requires buyers to secure affordable homeowners insurance. Relevance: Necessary for lender approval. Outcome: Buyers can exit the deal if insurance is unattainable.
20. Marketable Title Contingency
Purpose: Ensures the seller provides a clear title. Relevance: Protects buyers from future legal disputes. Outcome: Sales can’t proceed until issues are resolved.
Summary
These contingencies are vital in protecting both buyers and sellers in Ann Arbor and Dexter’s diverse real estate markets. Whether you’re dealing with a historic home, a rural estate, or a modern condo, understanding these contingencies can help you navigate the transaction process confidently.
Need help tailoring contingencies for your next transaction? Reach out today for expert guidance!