Contingencies in real estate contracts

Every contract can be unique.  The possibilities for contingencies are virtually endless.  Some of the more commonly used contingencies would include:

Financing.  Contingencies that depend on the buyer being able to obtain financing are very common. In Arizona, we define a loan program for you as part of the purchase contract. If you are unable to perform on the loan as described in the contract, then you are released from the contract. You may not receive your earnest money back though!

Home Inspections.  Probably the most common type of contingency is the “contingent upon satisfactory completion of inspection”.  There are any number of specific types of inspection for which a contingency might be included in a contract.  Some of the more common would include inspection by a qualified home inspector for hidden defects, pest inspections, water and sewage system inspections, inspections dealing with the presence of radon or mold, etc. In Arizona, we have a standard 10 day inspection period, during which time your earnest money is 100% fully refundable for any reason. On multifamily purchases, we often raise that inspection period to 14 days.

Appraisal.  It’s not unusual for a buyer to have a contingency that allows for a formal appraised value at or above purchase price.  Since lenders will nearly always want an appraisal performed too, sellers usually don’t have a problem with this.

Remember, just like everything else in real estate contracts, contingencies are negotiable.  Always take care before signing that you are comfortable with all contingencies included in your contract.  Likewise, take time to think about what contingencies you might like to have added, and talk to us when making your offer.