If you are considering selling or buying some real estate, you may have questions about what to expect. All real estate deals are based around a contract and a transaction between buyer and seller. Each contract will have its own specifics that revolve around the intricacies of the deal. One aspect both buyer and seller often have questions about are contingencies of a sale or purchase of a residential real estate property.
A real estate sale is often associated with one or several contingencies. A contingency, also known as a condition, is something that is often written into the paperwork for the sale of a property as a way to gauge expectations of buyer and seller, if or when something occurs that affects the transaction for the sale of a property. For example, a buyer may want a contingency relating to their ability to obtain financing. The contingency in a contract would then discuss, for example, how if a buyer were unable to secure financing after a deposit that their deposit would be refunded. A buyer may also be interested in a contingency of a sale pending an inspection.
If contingencies are not met, or are unable to be met to the satisfaction of either party, the transaction may be canceled by either party. Oftentimes, buyers are the ones who are interested in one or more contingencies in a home purchase contract. However, sellers may implement contingencies as well, specific to their situation. Perhaps the purchase and ability to get financing on a new home is contingency for the sale of their current home.
Contingencies shouldn't be viewed as a negative. Rather, they should be a way for buyer and seller to understand what comes next if an unfavorable situation comes up for buyer or seller. Then, both can prepare for this possibility and prepare to respond accordingly. Planning for the unexpected is part of successfully navigating real estate transactions.
Source: FindLaw, "Contingencies to Consider Before You Buy," accessed on Dec. 18, 2017