If you make an offer on a property, it should probably include several contingencies. What are they, why do you need them and how do they affect the deal?
A contingency is a provision that says that certain conditions must be satisfied or certain things must happen for the sale or purchase of a property to proceed. When you are buying or selling a house, carefully written contingencies make everyone's rights and obligations clear. It is the best way to avoid disputes later.
Probably the most common contingency involves the house inspection. The buyer and seller agree that the property must receive a satisfactory report. The buyer has the right to ask for repairs to any part of the property that is defective. The seller may then agree or not, depending on the circumstances.
Another common contingency is financing. A financing contingency protects the buyer and can contain very specific details about financing and specific types of loans. A buyer might ask for a contingency that states that the seller will complete some unfinished work as promised. You might also see a contingency that involves the seller's ability to buy another house.
While there are no rules as to how contingencies must be written, both the buyer and the seller must be happy with the nature of the contingency and with the language as it appears in the contract. There is no limit to the type or number of contingencies. If your aunt said she would give you money to buy the house, but only if she approves the house, that's a contingency. A buyer could ask that the purchase of the property be contingent on his or her ability to get the children into an exclusive school or themselves into an exclusive country club. If the seller agrees, the details of these contingencies will be committed to the contract.
Whether you're buying or selling or both, you'll probably hear about contingencies and have them added to your contract. Contingencies are an everyday occurrence in the buying and selling of real estate and serve to bring the best of the transaction to everyone involved.
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