What Role Do Contingencies Play in Your House Purchase Contract?

Posted on 8th Mar 2016

“Contingent” means that something is dependent on another event that may or may not happen. Contingencies help the buyer – and sometimes the seller – in a home purchase by making the purchase dependent on the occurrence of certain potential events. Four contingencies are commonly found in home purchase contracts.

The Mortgage Contingency

The vast majority of people contemplating buying a home will have to get a mortgage for such a large purchase. A mortgage contingency is the most common of all contingencies. It makes the purchase and sale of the home contingent upon you being approved for a mortgage. The seller will normally include in the contingency a date by which the mortgage must be approved. Some bank-required repairs may be included in this contingency as well, and these must be made before the mortgage will be approved.

The Inspection Contingency

Anyone who is considering buying a home should have it inspected before entering into a purchase and sale contract. We always advise potential buyers not to waive this inspection. Inspection contingencies can differ depending on the property. Such a contingency might include provisions for mold inspections, septic tank inspections, pest inspections or lead inspections. These are common findings in home inspections, as well as radon, chimney problems, well problems and environmental contamination issues. It is always a good idea to require an inspection and therefore an inspection contingency before binding yourself in a contract because of the wide variety of potential issues the home may have.

The Attorney Contingency

It is always a good idea to seek the representation of an experienced New York real estate attorney when you are purchasing a home. An attorney contingency is commonly found in home purchase contracts, allowing the buyer and seller an opportunity to have a lawyer review and approve the contract. The buyer’s real estate agent typically chooses the time frame each party has to seek legal review. Attorneys usually exchange letters and clarify details if there are any questions about the contract. Buyers sometimes waive the right for attorney approval, but we advise clients and potential clients against taking this risk.