Contingency clauses are often used in home sales. These contingencies have to be met in order for the seller and the buyer to be contractually obligated to work with one another. The potential buyer will put the contingencies in when they make the offer, and they only have to honor that offer if the contingencies are upheld.
Technically, there could be many different types of contingencies that a specific buyer could want to include. It depends on the specifics of the situation and how they want to negotiate the deal. But below are four of the most common ones that tend to show up.
A home inspection contingency means that the home has to pass the inspection before the agreement becomes binding. If it fails for some reason, repairs may need to be made or the buyer can walk away.
With this type of contingency, the potential buyer is simply checking to make sure that the home is worth the amount that they are paying for it. A lender will also be very interested in the appraisal.
Some buyers will put in offers before selling the home that they already own. Their contingency will state that they need to be able to make that sale before they have to buy the other house, preventing them from having two mortgages at the same time.
Additionally, many buyers will use financing or a mortgage loan to purchase a house. The contingency stipulates that they need to be approved for this financing or they don’t have to make the purchase.
No matter which side of the purchase you’re on, it’s important to know about all of the potential contingencies and the legal options that you have.