What are contingencies in a real estate purchase agreement?
Anyone who has bought or sold a home in Florida knows that the contracts that govern the sales can be incredibly long. Real estate contracts contain many terms that bind the parties to certain actions and provide them with specific remedies if the other party breaches the agreement. Included in those terms are contingencies and this post will discuss those in more detail.
A contingency is a term that must be completed for a contract to go through. For example, a common contingency that readers may see in residential real estate contracts regards loan procurement. The purchase of the home may be contingent upon the buyer obtaining a loan to cover the costs of the home and meet their financial needs.
Many contingencies are standard and appear in practically all real estate purchase agreements. Others may be specific to the needs of the parties. While the purchase of a home may be made contingent on the home passing all regular inspections, it may also be made contingent on a buyer selling their existing home before closing on their new home.
Because contingencies can make or break real estate contracts, it is a good idea to have attorneys involved in the home buying and selling process. These legal professionals can help their clients work through their agreements to ensure that they both understand and approve all the terms they will be bound to uphold. The failure of a person to fully understand their commitments under a real estate purchase agreement may land them in financial or legal difficulties later on.