Contract Terms That Cost You Money: Read This Before You Sign

Why this matters

If you’re selling or buying, your contract isn’t just “price + close date.” It’s a stack of deadlines, “only-if” clauses (contingencies), deposits, and notices that can make or break your deal. Below is a plain-English guide you can hand to your agent and say, “Show me each of these—on the contract.”

1) Price & Term (the basics people still miss)

• Purchase price: Don’t rely on what someone “said.” Point to it on the page before you sign.

• Term / close date: Is it a specific calendar date or “X days after acceptance”?

• Weekend rule: If a contingency or close date lands on a weekend/holiday, it typically rolls to the next business day.

2) Earnest Money Deposit (EMD): Your leverage

• What it signals: A meaningful EMD shows the buyer is serious. A tiny EMD = low risk to walk.

• When it’s due: Wire it to escrow/title before anyone sets foot in the house for inspections or appraisals.

• Reality check: EMD doesn’t auto-return to the buyer. Release usually requires both parties’ signatures.

3) Contingencies = the “Only-If” clauses

Replace “contingency” with only if:

• Inspections: “I’ll buy only if I’m satisfied with inspections (home, roof, etc.).”

• Appraisal: “Only if it appraises.”

• Loan: “Only if I’m approved for financing.”

• Sale of buyer’s home: “Only if my home sells.”

• Disclosures/HOA/NHD: “Only if I accept the disclosures and HOA docs.”

Timing math that trips people up:

• Day 0 = date of final signature (acceptance).

• Day 1 = the next calendar day.

• Each contingency has its own clock (e.g., 10, 15, 17 days).

4) Contingency Removal = when risk flips

• Contingencies don’t vanish on their own. Buyers sign a Contingency Removal (CR) form.

• After CR is signed, the buyer’s EMD is at risk if they bail for a reason not protected in the contract.

5) Notices that protect you (sellers)

• Notice to Perform (NTP): If a contingency deadline passes, you can serve an NTP (commonly 48 hours) to force action or regain the right to cancel.

• Demand to Close: If the buyer misses the close date, this puts a timer on performance and returns control to you.

6) Credits & personal property (read the fine print)

• Seller credits: Common for things like termite clearance or minor repairs.

• Personal property: If a loan is involved, most personal property can’t be included. (All-cash deals are more flexible.)

7) Proof of funds & pre-qualification (verify names!)

• Before acceptance: View actual proof of funds for EMD and down payment. Names must match the buyers on the contract.

• Call the lender: You (or your agent) can confirm down payment, employment type, underwriting status, and ability to close on time.

8) Counter-offers (why you sign “so many” docs)

• A Seller Counter overrides the original offer where it conflicts.

• A Buyer Counter can override the Seller Counter.

• All documents chain together, so yes—you sign multiple linked pieces to form the final agreement.

9) Disclosures: deliver early or risk a “reset”

• Provide all disclosures (state forms, agent visual, solar lease, HOA packets, etc.) asap.

• Late disclosures can grant the buyer an extra 5 days to review—and potentially cancel—even after other contingencies are removed.

10) Insurance: bind it early

• In many markets (fire/flood zones), binding homeowners insurance can derail a closing at the last minute.

• Require proof of bound insurance before contingency removal.

Common pitfalls to avoid

• Allowing inspections before EMD hits escrow.

• Not tracking dates → missing the window to serve NTP or Demand to Close.

• Assuming the EMD “automatically comes back” (it doesn’t).

• Forgetting that late/omitted disclosures revive the buyer’s cancellation window.

• Accepting a tiny EMD from a buyer who may not be committed.

Quick checklists

For Sellers

• Confirm: price, close date, and every contingency duration (in days).

• Require EMD wired before any property access.

• Deliver full disclosures immediately (agent visual, HOA, solar, NHD, etc.).

• Calendar all deadlines; serve Notice to Perform if a date is missed.

• Require proof of bound homeowners insurance before CR.

• Use counters to lock in terms; keep each document chained to the last.

For Buyers

• Understand each contingency and its deadline—extend in writing if needed.

• Know that signing CR = your EMD is at risk.

• Wire EMD on time; keep proof.

• Provide real proof of funds (matching names).

• Confirm you can bind insurance early.

• If using a buyer-broker agreement, keep it property-specific until you’re confident in the partnership.

FAQ

Q: My buyer missed a deadline—can I cancel today?

A: Serve a Notice to Perform (commonly 48 hours). If they still don’t perform, you can cancel per the contract.

Q: The buyer wants personal items included. Problem?

A: With financing, yes—keep personal property off the contract. In all-cash deals, it’s more flexible.

Q: The EMD is in escrow—can the buyer just pull it back?

A: Typically no. Escrow needs mutual written instructions (or an order after mediation/arbitration).