What Are Contingencies In A Real Estate Contract?
Purchasing real estate in Florida can be intimidating. You will be dealing with many mysterious agencies and signing reams of documents with little time to review them. Many of these contracts and agreements are standard with the usual terms, but to someone who has little experience in real estate transactions, you may have questions about what terms are usual.
Among the negotiable terms in your purchase contract are contingencies. These are provisions that allow you or the seller to stop the sale if certain conditions are not met. Contingencies are common, but you do not want the property seller to be the only one including those contingencies. To protect yourself, you would do well to seek legal advice about including contingencies that will allow you to avoid binding yourself to a contract that will no longer benefit you.
What conditions may change your ability to honor a contract?
You certainly don't want to be bound to a contract to purchase a home if you are unable to sell the home where you currently live. This is one example of where a contingency in your purchase contract will come in handy. It may be especially important to include this contingency in your contract if you're counting on using the funds from selling your home to finance the purchase of the new home. Without such a contingency, you may be legally bound to follow through with the purchase.
Other common contingencies in real estate contracts include these:
Obtaining a mortgage: An alternate option may be in your contract if you are unable to get a mortgage under the terms the buyer stipulates in the contract.
Securing homeowners insurance: You may not want to carry through with the purchase of a home if your insurance company refuses to offer an affordable policy.
Adjusting for the appraisal: If the appraisal on the house does not meet the seller's asking price, your contract may include a contingency for lowering the price.
Re-evaluating after an inspection: With a completed home inspection, a contingency will allow you to bargain for a reduced price if you learn of repairs the house needs.
Taking a final look: If your contract has a contingency, you will be able to walk away from the sale if the requested repairs are not complete by your final walkthrough.
Your contract may also contain contingencies for radon, lead paint, wells and sewer issues, and mold remediation, among many others. Your real estate attorney will know of any issues that may be common in homes in your area and of state laws related to contracts and real estate transactions.
Rignanese & Associates is available to work with clients on their legal needs. Please reach out to us at 863.294.1114.
1. On behalf of Kelly Kennedy of J. Kelly Kennedy, Attorney/CPA, PLLC which has been acquired by Rignanese & Associates, PLLC.