Look for Escape Clauses in Your Florida Mortgage Loan Contract

As the Florida housing market cools, buyers have the luxury to make certain requests that wouldn’t be possible under other conditions.

There’s the chance make more repairs, to lower asking prices and to throw in extras to get deals done. There’s also the option of including helpful contingency clauses in your Florida home mortgage contract.

One such contingency is for a house to pass an inspection. The buyer has the power to withdraw - without penalty - if said inspection turns up a number of problems. It’s an important way to make sure you aren’t ripped off.

Then, there’s the issue of financing.

It’s usually best to line up a Florida mortgage before making an offer, but many people wait until they’re ready to buy before they put their financing in place. If they fail to obtain a mortgage, they can get their down payment back as long as this clause is included in the deal.

“A year ago,” says New York City real estate attorney, Neil Garfinkel, “you couldn’t get any contingencies written into a contract. They are now finding their way back in.”

There’s a limit, of course, to what contingencies most sellers are willing to accept. Most sellers will still NOT make the sale of their property contingent on the sale of the buyer’s home, according to Garfinkel. This could tie up seller’s property for weeks, giving him/her no financial benefit if the buyer opts out.

During slow markets, however, buyers may not want to commit to a deal without being able to sell their old house first; otherwise, they are stuck paying two Florida mortgages. But there is a compromise …

The 72-hour contingency

Here’s how it works: The seller continues to market the house even after a contract is signed. If it attracts another offer, the original buyer has 72 hours to decide whether to go through with the sale - and try to sell the old house afterwards - or drop out, getting the earnest money back.

For sellers, the 72-hour contingency means the sale will be more likely to go through speedily, either to the first buyer or to a later one. In effect, the 72-hour clause doesn’t remove the property from the market.

Buyers prospoer, too, because they get some protection from the risk of losing earnest money if they can’t sell their old house in time. It’s a reasonable compromise when multiple home sales are at stake.