The Importance of Contingencies in Your Home Purchase Contract

Filed Under Real Estate Law · Tagged:  

By: Law Offices of Ronald J. Salvato – Orange County, NY Real Estate Attorney

The purchase of your home should be contingent upon getting certain information and having certain actions taken.  Read this article to find out more (and then share it with all your friends).

A typical real estate purchase contract will contain multiple conditions that must first be satisfied before the transaction can proceed to the closing.  These conditions typically relate to issues such as inspections, insurance, and more.  These conditions are known as contingencies.  Their purpose is to protect the buyer (and seller) in case of unforeseen circumstances.  For example, there may be a contingency that says the home must first be inspected by a home inspector and the potential buyer must be satisfied with the results of the inspection. Having contingencies in your real estate contract is vitally important considering the significance of a real estate transaction.  Purchasing a house is much different than purchasing a new computer or piece of furniture, both of which typically have acceptable return policies or warranties.  Once the deal is done it is pretty much done.  It is worth taking all necessary precautions and setting up the proper contingencies before the real estate transaction is finalized.

What contingencies should be included in your real estate transaction?

There are many contingencies that can and should be in place before the real estate transaction is finalized.  Getting help from a good real estate attorney can help answer the question for your specific circumstance about what contingencies you should make sure are included in your contract.  Some are fairly standard, and will be mentioned here but each situation contains different circumstances that should necessitate different contingencies.  You are strongly advised to get the assistance of a local real estate attorney to help you in this matter.

Insurance Contingency: Imagine buying a house in an area that is known for having hurricanes and finding out after the real estate transaction is complete and you've moved into your home that you are denied an insurance policy to help protect you in case of any damages to your home.  This has become more common and, as a result, home buyers have been adding insurance contingencies to their real estate contracts.  Seek help from a good real estate attorney to help make sure the validity of your contract is contingent upon receiving a written commitment for needed coverage by the appropriate insurance companies.

Financing Contingency:  Imagine signing a home purchase contract and then finding out you are unable to acquire the financing you were counting on.  The financing contingency is a common one.  Having this included in the contract makes the real estate sale contingent upon the buyer being able to secure either an acceptable loan or some other form of financing.  As the recession has made it more difficult for some people to secure a mortgage this contingency has become increasingly common.

Inspection Contingency:  This contingency is another common one.  Including this contingency makes the purchase of the home contingent upon receiving and being satisfied with the results from a home inspector (or inspectors) that you hire.  

Other Contingencies: There are many different contingencies that may be included in a real estate purchase contract.  Some of the more common contingencies have been discussed here.  However, each home buyer is different and comes to the real estate purchase process with a unique set of circumstances requiring specific contingencies.  A real estate attorney can help you determine what contingencies should be included in the contract and if some contingencies become a matter for negotiation, the real estate attorney can help you with that as well. 

About Ronald J. Salvato: Located in Orange County, NY, Mr. Salvato has nearly twenty years of practice as an attorney.  His areas of expertise include real estate law, civil litigation, and corporate/business law.  He has worked primarily as civil litigator of lawsuits including the litigation of contract disputes, and personal injury cases. In addition the firm has assisted clients in the preparation of wills, estate planning, trusts, power of attorney, and landlord tenant disputes, including evictions.  Please contact him for all of your Real Estate Attorney in Orange County, NY needs.  He also serves Ulster, Sullian, Dutchess and Putnam counties!