If this is your first time buying a home, you might feel a bit intimidated by the purchase contract. Contracts are often filled with industry and legal jargon, making them difficult to understand for the average buyer and seller.
Contingencies in particular give some buyers cause for concern because their contract depends on the contingencies being fulfilled. However, in most cases contingencies are pretty standard and only serve to protect the interests of both the buyer and seller during a real estate transaction.
In today’s post, I’m going to give you an introduction to contingency clauses and break down some of the most common contingencies you’ll find in today’s real estate purchase contract.
Simply stated, a contingency clause is a statement within a contract that requires a certain event takes place before the contract is considered legally valid. As a result, contingency clauses are used to cancel or invalidate a contract if certain conditions aren’t met before the sale is made final. So, if one party fails to meet the obligation of the contingency, the other party is no longer bound by the contract (or required to buy or sell the house).
Contingencies can get confusing when they are vaguely worded in the contract, making them difficult to interpret. In these cases, a court may decide the specific meaning of the clause or determine that it is too vague to be legally upheld.
The other instance in which contingency clauses can be confusing is when a party includes a contingency that is atypical for a real estate purchase contract. Buyers and sellers alike should be wary of unusual contingencies.
Appraisal contingency. Designed to protect the buyer, appraisal contingencies require that a home is appraised at a minimum amount, which is stated in the contract.
Financing contingency. Another contingency geared toward protecting buyers is the financing contingency. It states the number of days that a buyer has to secure financing for the home. This allows the buyer to cancel the contract (and offer) if they’re unable to secure suitable financing for the home.
Inspection contingency. One of the most important and most common contingencies is the inspection contingency. It allows the buyer to have the house inspected by a licensed professional within a certain number of days. This protects the buyer against unforeseen expenses and repairs that will need to be made in the near future.
House sale and kick-out contingencies. A house sale contingency gives the buyer a certain number of days to sell their home before financing a new one. However, since this can be a risky clause for sellers, a kick-out clause is often included. This contingency allows the seller to keep the home on the market and entertain other offers while the buyer secures financing and sells their other home or homes.
Kim Cuomo brings a 25 year wealth of experience and passion to the world of real estate, having dedicated over two decades to serving clients across the vibrant landscapes of South Florida. With a background as a paralegal, Kim's transition into real estate was not just a career change, but a discovery of her true calling. Her deep-rooted love for the industry is evident in the personalized, hands-on approach she adopts with each client, ensuring they feel valued and supported through every step of their journey.
Whether navigating the complexities of a first-time home purchase or orchestrating the sale of a luxurious $30 million estate, Kim's expertise spans the full spectrum of residential and commercial real estate. Her reach extends across Palm Beach County, Martin County, St. Lucie County, Broward County, and Miami-Dade County, offering a comprehensive understanding of the unique markets within each area.
Kim Cuomo's dedication to excellence and her ability to forge meaningful connections with clients make her not just an agent, but a trusted advisor and friend in one of the most significant transactions of their lives. Her commitment to providing exceptional service is unwavering, making her a standout professional in the South Florida real estate scene.
