Know the Law: Buyer Protections in a Residential Purchase and Sale Agreement

Photo of Brianna E. Burns
Brianna E. Burns
Associate, Corporate Department
Published: Union Leader
September 30, 2023

Q: I am in the process of buying a home and I am worried about what happens between signing the purchase and sale agreement and the closing. What protections do I have during this time as a buyer? What if something goes wrong?

A: Buying a home is an exciting time. It can also be nerve racking, especially in the time period between signing the purchase and sale agreement and the closing. This is the time when the buyer is under contract to purchase a home, but the seller still owns the home, and most likely still lives there. Because of the inevitable unknowns during this time, there are buyer protections built into the contract that may excuse the buyer from moving forward with the purchase if certain issues arise.

Most buyers have a financing contingency in the purchase and sale agreement, as most buyers obtain mortgages in order to buy a home. The mortgage process takes time to allow the lender to approve the borrower, review the property, and prepare the paperwork. The financing contingency is meant to protect the buyer by allowing them to terminate the contract if their financing is not approved and they do not have the funds to move forward with the purchase of the home. Usually there is a specific expiration of the financing contingency written into the contract, so it is important for buyers to be mindful of that date. If the buyer allows the financing contingency expiration date to pass without any action, it could mean they are bound to purchase the home, even if their mortgage is not approved.

Seller must deliver the property to the buyer with clean title, which means that the seller is in fact the undisputed owner and no other party can make any kind of legal claim against their ownership. Title is ordered and reviewed prior to closing to ensure the buyer is not purchasing a property with a title issue such as a lien, an outstanding prior mortgage, an unknown property owner, or a discrepancy in the description of the property itself.  If there is a title defect, purchase and sale agreements usually allow time for the seller to correct the issue. If the seller is unable to correct the issue prior to the expiration of the extended time period, the buyer may elect not to purchase the property.

Inspection contingencies have become less common in the current market, but it is a great protection for buyer. If there is an inspection contingency, the buyer may order an inspection of the subject property prior to purchasing to make sure there are no major physical issues with the home. Usually inspection contingencies have a deadline by which the buyer must notify seller of any issue or else the contingency is waived. It is important the buyer is aware of any such deadline.

There is also protection for the buyer in case of a casualty loss to the property such as a fire, flood, etc. Depending on the contract drafting, the buyer may be able to terminate the contract if there is any loss regardless of the amount of damage, or there could be a minimum dollar amount of damage the loss must exceed.

Depending on the specifics of the property and the agreement between the parties, there can be other specialized contingencies added into the purchase and sale agreement. There are also other standard requirements under the contract that must be fulfilled by both of the parties prior to or at closing.


Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.