Contingencies That Homebuyers Should Include in a Purchase Contract

Some of the standard contingencies in real estate contracts include financing, inspections, insurance and other things that must be in place before the sale is completed.

Both buyer and seller often request a number of contingencies in order to protect themselves prior to closing. One of the most common contingencies for homebuyers is the buyer’s inspection contingency. As a buyer, you want to be sure that there are no unforeseen hazards or problems with the property before you close — because afterwards, it is often too late. So you make the closing contingent on your being satisfied with the inspection report from inspectors that you hire.

Financing contingencies are also quite common, where the buyer conditions the purchase of the new property on securing financing to buy the new home. This contingency establishes a set period of time that the buyer has to finance the purchase. As credit markets have tightened, sellers have come to favor buyers that make all-cash offers so the financing contingency does not even need to be considered.

Florida’s increased chance of hurricanes as well as mold means homeowner’s insurance is a must for Florida homeowners. For this reason, some insurance carriers will not always insure against everything buyers want covered. Homebuyers might want the inclusion of an insurance contingency just in case they cannot get covered to their satisfaction.

Some contingencies may become a matter for negotiation, such as when a buyer wants to make the closing contingent on the sale of his or her existing home or when a seller wants to make the sale contingent on finding a new home to purchase.

All contingencies should be put in writing and should be agreed to by both buyer and seller. Having a Florida real estate attorney involved in the purchase or sale of your home will help you ensure the process goes smoothly and that all the contingencies you need to protect yourself are successfully negotiated.