May 8, 2006

Escape Clauses in Contracts

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.

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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.

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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 And keep in mind that an offer to purchase can be withdrawn at any time prior to acceptance, with or without an escape clause.

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