Ignite FB Tracking PixelWhat Is a Contingency Clause in a Home Buying Contract? - John Cavaliere

What Is a Contingency Clause in a Home Buying Contract?

by John Cavaliere 12/03/2018

If this is your first time buying a home, you might feel a bit intimidated by the purchase contract. Contracts are often filled with industry and legal jargon, making them difficult to understand for the average buyer and seller.

Contingencies in particular give some buyers cause for concern because their contract depends on the contingencies being fulfilled. However, in most cases contingencies are pretty standard and only serve to protect the interests of both the buyer and seller during a real estate transaction.

In today’s post, I’m going to give you an introduction to contingency clauses and break down some of the most common contingencies you’ll find in today’s real estate purchase contract.

Contingency clause definition

Simply stated, a contingency clause is a statement within a contract that requires a certain event takes place before the contract is considered legally valid. As a result, contingency clauses are used to cancel or invalidate a contract if certain conditions aren’t met before the sale is made final. So, if one party fails to meet the obligation of the contingency, the other party is no longer bound by the contract (or required to buy or sell the house).

Contingencies can get confusing when they are vaguely worded in the contract, making them difficult to interpret. In these cases, a court may decide the specific meaning of the clause or determine that it is too vague to be legally upheld.

The other instance in which contingency clauses can be confusing is when a party includes a contingency that is atypical for a real estate purchase contract. Buyers and sellers alike should be wary of unusual contingencies.

The main contingencies

  • Appraisal contingency.

  • Financing contingency.

  • Inspection contingency.

  • House sale and kick-out contingencies.


About the Author

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John Cavaliere
Hi, I'm John Caveliere and I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.