A contingency gives the buyer the right to back out of a purchase contract due to specific circumstances without any penalty. In any copntract, there may be a list of several conditions that need to be met in order to close the sale.
There are several common contingencies:
A home inspection contingency is listed in the contract when the closing of the sale depends on the result of various inspections performed.
A financing contingency is the most common contingency of all and appears when the sale is dependent on the buyer’s ability to receive an appropriate loan or other form of financing. The type loan and anticipated finance rate should be expressed within the contract for the protection of the buyer.
An insurance contingency is used so the contract will be dependent on the buyer’s ability to buy and receive an insurance commitment for their future home.
A title contingency is one of the most important contingencies that can be included. This allows the buyer to leave the contract if the seller of the property cannot produce a valid legal title.
Sale of home contingency is when the buyer of a property makes the sale dependent upon the sale of their previous property.
Contingencies are designed to provide you with the best possible agreement that fits you the best. So, do NOT be afraid to ask about possible contingencies!
Posted on April 21, 2016 at 10:47 am by Tom Saporito