The Matter of Contingencies In Your Pensacola Real Estate Contract

Posted by harryjason on November 17th, 2016

These conditions can include inspections, insurance, and financing matters, among others.  Keep in mind that contingencies are important for home buyers because these provide an out in case the deal doesn’t push through as planned.

The Workings Behind Contingencies

You, the buyer, and the seller will likely both ask for a number of contingencies to be included in the written purchase contract. This is understandable considering that both parties want to cover their backs in case the deal falls through.  You can also use a standard contract used by your realtors since most of the contingencies are already covered in it.

Keep in mind, too, that the inclusion of the contingencies should be made regardless of the location of the real property.  You may have, however, unique contingencies for a Pace Florida real estate property as against a Navarre FL real estate transaction. This can be attributed to the unique market conditions in each place even when both are in the same state.

One of the most notable inclusions is the time period allowed between the contract signing and the deal closing, known as escrow in many states. During the escrow period, you and the seller should work toward the compliance of the agreed contingencies. These can include scheduling inspections, securing loans, and getting documents, to name a few.

What happens when one of you fail to deliver on an agreed contingency? You have two options – renegotiate or call off the transaction. You have to carefully consider the pros and cons of each option especially when there’s so much money at stake.

The Types of Contingencies

There can be as little or as many contingencies as you want on your real estate contract. You and the seller have to agree on these contingencies for the transaction to move forward further.  The common contingencies include:

• Buyer’s inspection contingency. You want to be satisfied with the home inspection’s results before closing the deal.
• Financing contingency. You have to prove to the seller your ability to actually get a loan for financing the property purchase. Before the Great Recession, a pre-qualification letter from a lender was sufficient for the seller to close the deal. But times have changed and a financing contingency is considered a must on the contract.
• Insurance contingency. You want to ensure that, indeed, the house can be insured. You may just find that it cannot be insured because of various issues, such as the presence of toxic mold and the high risk of natural disasters.

You can also add unique contingencies of your own. You may, for example, add that the purchase of the home will only push through when you have sold your old home. Regardless of the contingencies included in your contract, you have to carefully consider the impact of each one on the deal.