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  • Writer's pictureMichael Baird

What Is Suitable Housing?

In this aggressive Seller’s market, Buyers are getting squeezed with respect to price and terms. One particular term your may buyers see is a suitable housing contingency. The standard language is simple, but generates some concerns.

Subject to Seller finding Suitable Housing,” is probably the most common language you are likely to see on a listing. However, there are some consequential details missing from this language.

  • Does suitable housing mean purchase or rental?

  • What does “finding” it mean?

  • Does the seller have the right to move in, or have actually moved in?

  • More importantly, when does this need to happen by?

  • Does the contingency expire?

  • Can the Seller terminate this agreement the morning of the closing?

As the language appears in this example, the answers are “don’t know” ending with an unfortunate “yes”.

Keep in mind what the parties are obligated to do. The Seller is obligated to sell the house and the Buyer is obligated to buy it. If either party doesn’t do what they’re obligated to do, the law provides a consequence. For the Buyer, their deposit is at risk, for the Seller, they must perform (sell the house.)

If the above suitable housing language is in the offer, the seller can terminate this agreement on the morning of the closing and the buyer has no recourse.

In offers, the solution is always to use language that can’t be misunderstood.

With that in mind, this language, or something like it, might be more productive:

“Seller’s obligations herein are contingent on their ability to enter into an agreement to purchase suitable housing. Said contingency shall expire 30 days from the acceptance of this offer. At that time, Seller may terminate this agreement due to an inability to enter into such an agreement as indicated herein. In the event the Seller gives no such notice, the contingency indicated herein is waived.”

So, in say 30 days, the parties are moving forward or not. Or, the parties can agree to extend the timeframe. Either way, if you have clients that have this language as part of their offer, it’s okay, call me.

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