A real estate contract that contains a contingency or contingencies means that the contract will not be considered valid if certain conditions or events fail to exist at any point in the transaction. For example, a basic “loan contingency” written into a real estate contract would state that the home in question will be sold to the buyer only upon the buyer securing a loan at or around a certain rate of interest. While this contingency protects the financial interest of the buyer, it also allows the buyer and the seller the opportunity to withdraw from the contract if this contingency is not met without worrying about the legalities of contract law.
Other types of contingencies that Bergen County home buyers and sellers frequently encounter include:
- Appraisal contingency—for buyers seeking home loans, adding an appraisal contingency to the contract means that the house they intend on purchasing must be professionally appraised at or above the value of the loan.
- Passing inspection—a contingency for passing a home inspection protects the buyer from discovering costly problems with the home at a later date. If an inspector finds damage, this allows the buyer to request the seller effect repairs before the sale of the home can be completed. Things like a termite infestation, mold and mildew, evidence of lead-based paint or roof deterioration are examples of inspection contingencies.
- Private well water inspection—if a home’s plumbing system is not associated with the city, the buyer can ask that the seller have someone check the quality of the well water to ensure that is it uncontaminated and safe to use.
- Selling the buyer’s current home—this prevents buyers from being obligated to purchase another home before they can complete the selling of their current home.
- Contingency clause for an attorney review—if applicable, the buyer and seller may wish for additional time to have their lawyers examine the contract before signing.
Contingency Contracts and Earnest Money Deposits
Real estate brokers usually accept money from buyers to put into an escrow account for the buyer who makes an earnest offer on a home. This is simply to show the seller that the buyer is serious about purchasing the home and is especially important to a seller who may have already had several people inquire about the home. Home sale contracts involving an escrow account often include contingency clauses stating that if the buyer is unable to obtain a loan or the seller cannot fulfill other contingency demands, then the escrow funds are returned to the buyer.
Orly Chen can help buyers and sellers craft contingency contracts that not only facilitate any type of real estate transaction but are also beneficial to the interests of both parties. To receive the best and most experienced Bergen County real estate assistance and advice available, contact Orly Chen and discover what makes Bergen County homes the most popular homes on the market.