What Are Contingencies in a Real Estate Contract?
A contingency is a formal clause in a real estate contract that enumerates particular conditions that must be met by either the buyer or the seller in order for the principals to proceed to the next step in the contract. Found in every offer-to-purchase or sell contract, contingencies protect the interests of both buyers and sellers. Failure to meet a particular contingency can result in breach of contract and possible penalties to the party at fault. Basic Contingencies in Real Estate Contracts Contingencies are divided into categories according to their purpose: (1) protection for the seller (2) protection for the buyer and (3) mutual protection of both buyer and seller. Most real estate contracts contain two universal contingencies: a mortgage contingency and a home inspection contingency. Mortgage Contingency – The mortgage contingency stipulates that the buyer will make every effort to obtain a mortgage for a particular amount, at a prevailing interest rate within a specified peri
A contingency is a formal clause in a real estate contract that enumerates particular conditions that must be met by either the buyer or the seller in order for the principals to proceed to the next step in the contract. Found in every offer-to-purchase or sell contract, contingencies protect the interests of both buyers and sellers. Failure to meet a particular contingency can result in breach of contract and possible penalties to the party at fault. Basic Contingencies in Real Estate Contracts Contingencies are divided into categories according to their purpose: (1) protection for the seller (2) protection for the buyer and (3) mutual protection of both buyer and seller. Most real estate contracts contain two universal contingencies: a mortgage contingency and a home inspection contingency. Mortgage Contingency – The mortgage contingency stipulates that the buyer will make every effort to obtain a mortgage for a particular amount, at a prevailing interest rate within a specified peri
