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offer to purchase can be withdrawn at any time prior to acceptance, with or without an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.
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