Does Your Offer Have a Financing Contingency?

In Utah, THE FINANCING CONTINGENCY in an offer is a protection to the Buyer if their financing falls through.

It allows the Buyer to cancel the contract without forfeiting their Earnest Money. If not included in the offer, and the Buyer's financing falls through, the Seller can either cancel the contract and retain the Earnest Money deposit as liquidated damages, or return the Earnest Money and sue the Buyer for not performing thier duties of the contract. They can also pursue other legal remedies, if available and if they have chosen not to retain the Earnest Money as liquidated damages.

If the financing contingency is included in your offer, and you work diligently to obtain the loan, but the loan is denied (on or before a specified deadline), the Seller has no recourse against you. You can cancel the contract and your Earnest Money deposit will be returned to you.

In almost all transactions involving a loan, the Buyer should insist on making the financing contingency a part of the contract.

As each transaction is unique, there may be situations where it is in a Buyer's best interest to not have a financing contingency as part of the offer or to choose to include such a contingency with a short deadline. An Exclusive Buyers Agent, working on your side, can help you determine what is best in your situation.

Homebuyer Representation, Inc. is a Real Estate Brokerage that services Salt Lake City, Utah and surrounding areas. Agents are Exclusive Buyer Agents (EBAs) and represent BUYERS ONLY. For Free Reports or a Free Consultation, contact Homebuyer Representation at (801) 969-8989 or click the highlighted links in this paragraph.

©2007 Homebuyer Representation, Inc.