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According to Investopedia.com,
“A contingency clause defines a condition or action that must be met in order for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties (i.e., the seller and the buyer) agree to the terms and sign the contract.
Accordingly, it is important to understand what you’re getting into if a contingency clause is included in your real estate contract.”
Finding the perfect house for your family takes time and money. Once you have found the right home and made the offer, it might serve you well to have a contingency clause just in case the things don’t work out.
Every average real estate attorney would be able to put up some common contingencies in your contract but the key is to be creative with contingencies. In addition to the regular home inspection and appraisal clause, you can put contingencies that will help you get the sufficient time to close the deal.
- Home inspection and appraisal contingency: Both of these clauses are included in every single contract. Under a home inspection clause, a buyer has the right to ask for a professional home inspection and back out of the deal if major damages are detected in the process. At the same time, an appraisal contingency gives you the room to back out if the appraise price comes out to be lower than the asking price of the house.
- Mortgage availability clause: In most of the cases, buyers are able to find appropriate lenders upfront and fund the transaction. A mortgage availability clause allows any of the parties to cancel the deal if the buyer couldn’t find appropriate financing.
- Selling existing home clause: If you are waiting for the sale of your current home before moving into the new one, it is best to include a contingency clause that allows you to cancel the offer if the sale did not go through.
- Move your lodging earlier than expected: If you have made a successful sale of your existing house and want to move in earlier into the property, put it in your offer. It will save you from putting your furniture in a temporary lodging.
- HOA rules contingencies: If you are moving into an area with a homeowners association, it might help you to put in a clause that allows you to cancel the contract in case of uncomfortable HOA rules.