CONTINGENCIES EXPLAINED: THE PROTECTIONS BUYERS SHOULD UNDERSTAND

CONTINGENCIES EXPLAINED: THE PROTECTIONS BUYERS SHOULD UNDERSTAND

When you read a real estate contract, you may see the word contingency.

It can sound complicated, but the basic idea is important:

A contingency is a condition that must be satisfied according to the terms of the contract.

Different contracts can contain different contingencies.

For example, a transaction may involve provisions related to:

Inspections

Giving the buyer an opportunity to investigate the condition of the property.

Financing

Allowing the transaction to proceed subject to certain financing requirements.

Appraisal

Addressing what happens if the property's appraised value doesn't support the agreed purchase price.

Sale of another property

In some situations, a buyer's purchase may depend on selling another property.

The specific rights, deadlines and consequences depend on the contract.

That's why buyers shouldn't simply sign because they've found a house they love.

Read the contract.

Know your deadlines.

Understand what happens if a condition isn't met.

And ask questions when something isn't clear.

A contingency isn't necessarily a way to get out of a deal.

It's part of the contractual framework that can protect the parties when specific conditions aren't satisfied.

Real estate contracts deserve your attention.

Know what you're signing before you sign it.