Contingencies in Real Estate Contracts
July 28, 2010
In today's real estate market place, contingencies in real estate purchase agreements are pretty routine. A prospective buyer writes a contract to purchase a property at a given price, under stated terms. However, a purchaser using the standard California of Realtors Purchase Agreement will include a number of contingencies which, if not removed in writing, will permit the potential buyer to cancel the agreement and be entitled to a return of the earnest money deposit.
These contingencies include approval of an inspection of the property. Buyer hires a professional inspector who inspects and writes a written report as to the condition of the property. The buyer may then accept the condition of the property or request the seller to make repairs. Once the negotiation for repairs is completed, the purchaser either removes the contingency regarding the condition of the property or cancels the purchase agreement.
Financing is typically another contingency. The purchase is contingent upon the property appraising at the purchase price and the buyer being approved for the loan as stated in the purchase agreement. Again, if one of these conditions is not met, the potential buyer may cancel the agreement and be eligible for the return of the initial deposit (earnest money).
Insurability is another possible contingency. The sale of the buyer's present property may also be a contingency.
The original written purchase agreement will state whatever contingencies, a potential purchaser wishes to includes. Once the purchase agreement has been agreed to by both parties, the time to remove each contingency begins counting down. The day the agreement is signed is day 0. the following day is day 1 and so on.
It was once the case that when the time frames stated in the purchase agreement had passed, the contingency automatically was over. In the present C.A.R. Purchase Agreements, these contingencies will continue to be in effect until they are removed in writing. It is important for all parties to act diligently and in a timely matter.
In today's real estate market place, contingencies in real estate purchase agreements are pretty routine. A prospective buyer writes a contract to purchase a property at a given price, under stated terms. However, a purchaser using the standard California of Realtors Purchase Agreement will include a number of contingencies which, if not removed in writing, will permit the potential buyer to cancel the agreement and be entitled to a return of the earnest money deposit.
These contingencies include approval of an inspection of the property. Buyer hires a professional inspector who inspects and writes a written report as to the condition of the property. The buyer may then accept the condition of the property or request the seller to make repairs. Once the negotiation for repairs is completed, the purchaser either removes the contingency regarding the condition of the property or cancels the purchase agreement.
Financing is typically another contingency. The purchase is contingent upon the property appraising at the purchase price and the buyer being approved for the loan as stated in the purchase agreement. Again, if one of these conditions is not met, the potential buyer may cancel the agreement and be eligible for the return of the initial deposit (earnest money).
Insurability is another possible contingency. The sale of the buyer's present property may also be a contingency.
The original written purchase agreement will state whatever contingencies, a potential purchaser wishes to includes. Once the purchase agreement has been agreed to by both parties, the time to remove each contingency begins counting down. The day the agreement is signed is day 0. the following day is day 1 and so on.
It was once the case that when the time frames stated in the purchase agreement had passed, the contingency automatically was over. In the present C.A.R. Purchase Agreements, these contingencies will continue to be in effect until they are removed in writing. It is important for all parties to act diligently and in a timely matter.
posted by shirley harry at 7:28 AM
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