Real estate transactions are among the most complicated financial deals that ordinary citizens will ever make in their lifetimes. One of the factors that contributes to the complexity of real estate contracts is the presence of contingency provisions. Now, the concept of contingency provisions is fairly simple: the sale of a particular home or piece of real property cannot go through without something else happening (or something happening in a specific time frame).
However, contingency provisions in a real estate contract are often negotiated by the involved real estate agents. Because of this, contingencies in real estate transactions can get tricky for the buyer and seller. To help you understand the concept of contingencies in real estate, we have provided a few examples of contingency provisions you might encounter.
Examples of Common Contingencies
The potential contingencies that can be included in a real estate contract are numerous. However, there are a few common types that you might encounter:
- Contingent on buyer selling his or her existing home. Unless someone must relocate immediately due to a new job, most people must consider how to navigate selling their current property while making an offer on another home. For this reason, the buyer will often seek to make the transaction in consideration dependent on selling his or her own home. For the seller’s sake, there is usually a period in which the buyer must sell his or her current home. If it is not sold in the agreed-upon time frame, the buyer has the right to exit the contract and seek another buyer.
- Contingent on buyer obtaining financing. Being forced to go through with your purchase of a home if you aren’t able to obtain a mortgage loan (or one with favorable conditions) could become a reality if the financing contingency isn’t included in your real estate contract.
- Contingency on satisfactory home inspection. This is a crucial part of buying a home. Buyers in residential real estate transactions enjoy greater protections than commercial buyers; you can see this through the contingency provision in a real estate contract. A buyer will generally seek to have several different types of inspections performed on a house. If these inspections identify any flaws in the house, the buyer can either demand that the seller fix the issues or back out of the contract.
Conclusion
Both sellers and buyers can employ effective contingency provisions in real estate contracts to protect their interests. The best way to ensure that you are dealing with an optimal contract in your next real estate transaction is to contact the Law Office of Ray Garcia today; you can call us at 305-227-4030 today to get started on a consultation.
Law Office of Ray Garcia, P.A.
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