Contingencies Simplified

Most real estate contracts have provisions called “contingencies,” which are intended to make the entire contract null and void if certain events occur. Contingencies are also sometimes called conditions. It’s like saying, “I will only go through with this contract if so-and-so events do or don’t happen.” Buyers or sellers can propose contingencies in order to protect themselves and also to serve as a way of bargaining. Read on to discover some examples of contingencies that are commonly found in real estate transactions.

Contingency for Sale of Another Home: What if you can only afford to buy a new home if you’re able to sell your own home? If you’re already under contract to sell your old house, you may propose a contingency that would make the contract only valid if the sale of your previous home goes through successfully. A seller does not have to accept this if they do not want to — their decision will likely depend on a number of factors, such as whether or not they are confident in their ability to get another offer.

Contingency for Mortgage Approval: A contract will quite often have a contingency for the buyer’s mortgage to get approved. Sometimes it will specify that the terms be the same as stated in the contract.

Contingency for Appraisal: Not sure of the true value of the home you are purchasing? You can make an appraisal contingency. If, after the house is appraised, you learn it is not worth as much as you thought, you can have the chance to back out or negotiate for a lower price.

Contingency for Inspection: These are quite similar to contingencies for appraisals. If the home inspection reveals any unexpected flaws that could be costly to repair, having an inspection contingency gives the buyer the option to back out or negotiate a lower price.

These are just a few of the many types of contingencies you may find in a real estate contract, but we hope it gives you a clearer understanding of what contingencies do and how you might be able to use them to protect yourself in real estate transactions. 

If you are buying or selling real estate, it is important to have the guidance of an experienced real estate attorney who can give you advice and protect your best interests. The Auricchio Law Offices team is here to help. Give us a call at (312) 263-0010 to schedule your free consultation.

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Auricchio Law Offices

Auricchio Law Offices in Chicago provides a complete range of real estate services. We facilitate residential and commercial real estate transactions, advise and represent condominium associations, and represent property owners in real estate litigation. Whatever your real estate issue, we will work diligently to achieve your goals in a timely and efficient manner.

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