Contingencies to Include in Your House Purchase Contract
by
Ilona Bray, J.D.
Find out how to make your home purchase contingent on getting certain information and answers.
Buying a house isn't like buying a television, where you can return it within 30 days if you don't like it. Once the deal is done, it's pretty much done. So it's worth investigating whether you're doing the right thing before the purchase is finalized.
The standard home purchase contract lists several conditions that must be met before the closing will take place, covering issues like financing, inspections, insurance, and more. These conditions are called "contingencies."
How Contingencies Work
You, as well as the seller, will probably ask that a number of these contingencies be added to the written purchase contract. (As a practical matter, you'll be doing most of this on paper, within your written offers and counteroffers.)
The contract will build in a certain amount of time (usually several weeks) between the contract signing and final "closing" of the deal. (In some states, this period is called "escrow.") During this time period, you and the seller will be working hard to meet or remove the various contingencies (for example, by securing a loan and scheduling inspections), and will advise the other party of progress being made. If either of you fails to meet or remove a contingency, you can either call off the purchase or renegotiate around the issue.
Types of Contingencies
Some contingencies are quite standard, and both you and the seller would probably be foolish to reject them. For example, a buyer's inspection contingency is quite common -- in which you condition the closing on receiving and being happy with the result of reports from inspectors whom you hire. For more information, see Get a House Inspection Before Buying.
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