What is a Title Contingency & How Does it Relate to the Home-Buying Process?

Buying a home is a detailed process, one that includes many steps that must be taken by both the home buyer and by the seller of the home.  In this article, we will discuss the steps that your title company must take as well, and why you should rely on your title company when purchasing a home.  At Arrowhead Title, Inc., your number one title company at the Lake of the Ozarks, we are here to help you fully understand the home buying process and the role your title company plays in the purchase of your new home.

Buying a home is a huge investment, so it makes sense that there are many more rules regarding the purchase of a home than the purchase of other items.  When you put an offer on a house, you do so through a home purchase agreement wherein there are several things a seller must do or agree to do before you, as the buyer, are willing to purchase the home.  In addition, you as the buyer must make agreements with the seller before the home sale can be finalized.  The home purchase agreement will include such things as the purchase price, the closing date, and any agreement you and the seller decide is necessary.  The home purchase agreement also contains any buyer contingencies, or conditions, that you as the buyer must meet in order for the home sale to be considered valid. This process is put in place to protect both the buyer and seller, by making sure everything is in order when it comes to the home once the sale is final. 

Common Contingencies in a Home Purchase Agreement

Home buying contingencies often include a financial contingency for the buyer.  This would be an agreement that the buyers’ financing must be approved before the sale is considered final.  Another home buying contingency that is often included in the home purchase agreement is the home inspection contingency, which states that the home buyer has the right to opt out of the sale of the home if the home inspection shows that the home is in need of serious repairs or has an extreme amount of existing damage.  A house sale contingency states that the buyers’ current home must sell within a certain date in order for the purchase to legally go through.  Last but not least of the common contingencies in a home purchase agreement is the title contingency, which we will discuss below.

Title Contingency

As you can see from above, there is quite a lot of research that goes into the past of the home itself before the sale can be made final.  This is where a title contingency is so important.  Having title insurance itself protects against mistakes or fraudulent actions made in the past by others’ that were not caught at the time of sale.  At the start of your home-buying process, however, you will want to have your title company do a thorough “background check” so to say, on the home and property you plan to purchase.  This is known as a title check.  The title contingency gives you as the buyer the right to opt out of the final purchase of the property if the title search reveals any issues with the title.
Issues that could be discovered in a title search include public record errors, fraud, or an unknown lien on the property, among many other title issues.

Now that you know a bit more about what is included in the home purchase agreement and what exactly a title contingency is, you hopefully recognize the importance of both a thorough title search and getting title insurance on your Lake of the Ozarks property.  If you are in need of a title insurance company at the Lake of the Ozarks, we hope you will keep us in mind!  Arrowhead Title would be honored to help you throughout your home closing process and we are here to answer any questions you have regarding title insurance at the Lake of the Ozarks.

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