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What Are Contingencies in a Residential Real Estate Contract?

Posted on in Real Estate

South suburbs of Chicago real estate attorney

A residential real estate transaction begins when a buyer makes an offer to purchase a home and the seller accepts that offer. The parties will then sign a contract, known as a purchase agreement, which will outline the details of the transaction, the costs for which each party is responsible, and important dates during the process, including the date when the home closing will take place. Contingencies are an important part of a residential real estate contract, and these terms specify conditions that will apply to the transaction while stating when either party can back out of the sale. When buying or selling a home, a real estate attorney can help you understand the contingencies that apply to the sale and make sure that your contract includes terms that provide the protection you need.

Types of Contingencies

A contract’s contingencies will describe the conditions that each party must meet before a real estate transaction can be completed. These terms can help reduce the risk for both buyers and sellers, allowing them to terminate the sale if necessary. Some common contingencies in a real estate contract include:

  • Loan contingencies - A buyer may include terms stating that the purchase will only go through if they are able to obtain a mortgage. This will allow the buyer to back out of the sale if they are unable to obtain financing that will allow them to purchase the home.

  • Home sale contingencies - A buyer may also make a transaction contingent on their ability to sell their current home before completing the purchase. This can help them avoid having to make mortgage payments on two homes while they are trying to sell their original home.

  • Appraisal contingencies - A buyer may have a home appraised, and their contract may specify that they can terminate the transaction if the appraisal determines that the property is worth less than the amount offered.

  • Home inspection contingencies - During the transaction, an inspection of the home will be performed, and this will identify any defects in the home or issues that may need to be addressed, such as lead paint, toxic mold, asbestos, termites, radon, roof damage, or problems with sewer systems. A contract may specify how these issues will be addressed, including through repairs performed by the seller or reimbursements to the buyer. Contingencies may allow the buyer to back out of the sale based on defects found in the inspection, or a contract may allow the seller to terminate the transaction if the costs of making repairs are too high.

  • Early occupancy agreements - In some cases, contingencies may allow a buyer to move into the house before the closing date and pay rent to the seller until the transaction is completed.

Contact Our Evergreen Park Residential Real Estate Attorney

During a residential real estate transaction, the terms of your purchase agreement can provide you with protections and ensure that you can complete the sale successfully. At the Law Offices of Marques A. Eason, LLC, we can make sure your rights are protected when negotiating the contingencies in your real estate contract, and we will protect your rights from the beginning to the end of your transaction. Call our knowledgeable and dedicated Chicago, IL real estate contract lawyer today at 312-973-3755 to schedule your confidential consultation.

 

Sources:

https://www.thebalance.com/crucial-types-of-contract-contingencies-for-home-buyers-1798291

https://www.quickenloans.com/learn/real-estate-purchase-agreement

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