Contingencies are commonplace in contracts of all kinds. A contingency allows for one party or both to legally back out of a contract in the event of some specific condition occurring. They are a protection against the unknown.
In real estate there can be contingencies inserted for either the buyer, seller, or both. These can take many different forms and either party may change their minds based on the result of the contingent event.
Some examples of home buyer contingencies:
• Home Inspections – condition of the home
• Specialty Inspections – such as mold, geological, roof inspections
• Code Violations – such as improvements made without permits
• Lender Appraisal – confirms the offered price is in line with the value of the home
• Sale of Current Home – allows the buyer to back out if they cannot sell their current home in a specific time frame
• Final Loan Approval – when the loan is ready for signature and close
• HOA Covenants, Conditions & Restrictions – ensure rules and regulations do not infringe on enjoyment of property
• Insurability – home owner’s insurance available at a reasonable rate
Home sellers can have contingencies included as well, such as one that states the sale is contingent on finding a replacement home. Contingencies are a fact of contract law. In real estate, they ensure that the offer is concluded as expected.
Contact me to discuss whether or not contingencies are the right way for you to proceed in a purchase or sale.