Whether a buyer is making an offer to purchase a property from a seller or considering a counter-offer received from a seller, he or she must be very careful to ensure that the proposal includes certain clauses called contingencies which provide important protections for the buyer. A contingency is defined as an agreed to excuse for a party’s non-performance of the contract. Simply, it is a condition written into the contract which allows a party to withdraw without being in breach.

An important contingency for a buyer to consider involves a home inspection prior to the consummation of the closing. This contractual clause requires the buyer to hire a home inspector to inspect the home within a specified period of time from the date the contract is ratified. A home inspection is then performed and a report is delivered to the buyer. The buyer then lists all required repairs to the home on an addendum and delivers this document to the seller. The seller typically has the right to agree to do everything on the list; refuse to do anything on the list; or compromise with the buyer with regard to the things that he or she is willing to repair. In the event of an agreement, the seller will be required to make all repairs and the contingency is removed. In the event the seller refuses to make any repairs, the buyer has the right to proceed to closing or withdraw from the contract. If a seller offers to make some repairs but not all, the parties can proceed to negotiate a compromise with regard to what repairs will be completed. If they do not agree, the buyer has the right to withdraw from the contract.

The terms and conditions contained in a real estate contract set forth requirements and obligations that have direct impact on the buyers and sellers of property. A proper understanding of these clauses is vital to protecting your interests in real estate transactions. Please call an experienced attorney at the law firm of Paulson & Paulson, PLC for more information.