Common Contingencies and the Date Calendar

The Durango Team has been working on a series of blogs that detail the home-buying/selling process. They recently looked at the negotiation of an offer. This week they took a look at a couple common contingencies once a property is under contract, and the importance of the date calendar. In general, the most common issues or cause for termination of a contract are inspections and loan objection deadline.

Inspections (Section 10):

In the Colorado Real Estate Contract, Section 10 addresses inspections. This states that the Buyer has a right to inspections. The language is written in such a way that, for almost any reason, a buyer could terminate the contract based upon inspections. It is important to read the detailed paragraph in the real estate contract. Based on any inspection issues, if inspections are “unsatisfactory, in Buyer’s sole subjective discretion, Buyer may, on or before, inspection objection deadline” give notice to terminate or make an inspection objection for any “unsatisfactory physical condition that Buyer requires Seller to correct.” Based on the buyer’s sole subjective discretion, he or she could give notice to terminate on inspection objection.

If the seller receives an inspection objection, this will lead to a deadline for inspection resolution. If the buyer and seller cannot agree to an inspection resolution by the inspection resolution deadline, the contract automatically terminates. In the sales process, most contracts receive some level of inspection objection, and this is where the Durango Team utilizes our expertise to help our clients work through and understand some of the inspection issues to reach a satisfactory resolution.

Loan Objection (Section 5):

The Loan Objection section of the contract has similar language to the inspection section. “This contract is conditional upon Buyer determining, in Buyer’s sole subjective discretion, whether the New Loan is satisfactory to Buyer, including its availability, payments, interest rate, terms, conditions, and cost of such New Loan.” Of course, this is under the assumption that a buyer is operating in good faith, but it is important to understand the contractual provisions and timeline.

Additionally, the form contract provides the following list of processes to complete: review of title, review of off-record title, review of association documents and association financial documents, seller’s property disclosure, appraisal valuation, survey, ability to get property insurance, review of due diligence documents, conditional sales deadline, and other contingencies specific to the property and type of property.

Dates and Deadlines (Section 3).

The date table in the contract helps give an overview and reference for the corresponding section and paragraph of each topic. The Durango Team aids our clients in understanding the importance of the timelines and deadlines. There has to be enough time to either receive or review documentation required by contingencies. Sellers typically want deadlines as tight as possible so if a contract does terminate, there is less lost marketing time for the property. Buyers typically want as much flexibility in dates as possible. Sometimes someone will ask for 4-6 weeks for inspections, but The Durango Team can usually get most inspections done within 2-3 weeks. On the other hand, for example, with a rural property sale that is going to require well testing, water testing, and verification of septic system, the buyers for these properties may need more time to get information needed for evaluation.

As professionals, The Durango Team understands the nuances of each type of property. Our goal is to have a date table that is fair to both buyers and sellers. In addition, our licensed closing coordinator, Kim Tucker in the Durango Team office, manages the dates for each contract. She does this for buyers and sellers and assists with any of the needed coordinating. We also encourage our clients to keep track of dates to ensure all eyes are aware of the important deadlines.

The above is a general overview of some of the common contingencies and factors to consider in a Colorado real estate contract. As always, our team is prepared and equipped to guide our clients through each step of the sales process, and we welcome any questions you may have.


Post courtesy of The Durango Team.  Read more or search Durango real estate.

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