What are contingencies?
When buying or selling a home, one word that you’re guaranteed to hear over and over is “contingency”. Unfortunately, “contingency” also happens to be one of those words that is difficult to define without using the actual word, itself. Here’s the gist of it:
Think of a contingency as a sort of safety net that a buyer puts in place in order to ensure that they purchase a property only after certain conditions have been met. Still with me? Rather than providing any more of a lofty or confusing definition, why don’t I give you a few examples… Most purchase offers contain three traditional contingencies.
1. Almost all buyers want to have their attorney review their purchase contract.
2. The majority of buyers want to have inspections conducted on the property.
3. And, finally, most buyers need to secure a mortgage.
Taking these contingencies in order, here’s a little more information:
ATTORNEY REVIEW: Both buyers and sellers want to have their attorney review what is often times a dense and legalistic four page document. The reason for this is that a real estate attorney can ensure that none of the conditions written into the purchase contract by a potentially wily and unscrupulous agent are detrimental to their client’s financial well-being. Attorneys will traditionally spend ten or fifteen minutes reviewing a purchase offer with their client before issuing their approval and, by extension, removing the attorney approval as a contingency of sale.*
*The end goal for any contingency is removal, once all conditions have been met.