When it comes to signing a building contract, there are various factors that need to be considered. One of the most important considerations is financing. Building a new home or undertaking a significant renovation project is a considerable investment, and most people cannot pay for it upfront. Thus, obtaining financing is crucial, and it is best to make sure that the contract includes a subject to finance clause.
A subject to finance clause is a condition in the contract that makes it contingent on the borrower securing financing from a lender. This clause gives the buyer an out in case they are unable to get financing for the project. The clause usually includes a timeframe within which the borrower must secure a loan. If the borrower is unable to obtain financing within the specified time, the contract becomes null and void.
Most building contracts have a subject to finance clause, and it is best to ensure that the clause is included before signing the contract. The finance condition is intended to protect both the buyer and the builder. If the buyer is unable to secure financing, it prevents them from being forced to purchase the property. Conversely, if the builder starts the project and the buyer is unable to secure financing, the builder may be left with an unfinished project.
When entering into a building contract, it is also essential to consider the terms of the loan. Some loans may require the borrower to start making payments immediately, while others may offer a grace period. It is essential to understand the terms of the loan before signing the building contract.
In conclusion, a building contract should always include a subject to finance clause. This condition protects both the buyer and the builder and ensures that financing is secured before the project begins. It is also essential to understand the terms of the loan and to make sure that the loan aligns with the terms of the building contract. By doing so, both parties can avoid any legal complications and ensure a smooth sailing project.