Most Purchase Agreements Are Contingent on Which Two Items Answer
When it comes to purchasing a new home or property, there are often many details to consider and one of the most important aspects is the contingencies included in the purchase agreement. A contingency is a clause in the agreement that outlines specific conditions that must be met in order for the sale to be finalized.
While there are many different contingencies that can be included in a purchase agreement, there are two that are particularly crucial: the home inspection contingency and the financing contingency.
The home inspection contingency is designed to protect the buyer by allowing them to have the property inspected by a professional home inspector. This contingency typically gives the buyer a set period of time, usually 7-10 days, to have the inspection completed. If any issues or concerns arise during the inspection, the buyer can then negotiate with the seller to have the issues addressed or to request a credit or price reduction.
In addition to the home inspection contingency, the financing contingency is also a critical element of a purchase agreement. This contingency ensures that the sale is dependent on the buyer securing financing for the purchase. If the buyer is unable to secure financing, the sale would not go through and any earnest money or deposits would be returned to the buyer.
Without these two contingencies, a purchase agreement could be risky for both the buyer and the seller. For the buyer, without a home inspection contingency, they could potentially end up with a property that has serious issues that they were unaware of, and for the seller, without a financing contingency, they could end up with a buyer who is unable to secure financing and the sale could fall through.
It is important to note that while these are two of the most common contingencies in a purchase agreement, there may be others that are relevant in certain situations. For example, if the property is being sold subject to a tenant lease, there may be a contingency related to the tenant vacating the property by a specific date.
In conclusion, when it comes to purchasing property, contingencies are a critical part of the purchase agreement. The home inspection contingency and the financing contingency are two of the most important contingencies to include, as they protect both the buyer and the seller and ensure that the sale is contingent upon these important conditions being met. It is important for both parties to carefully review the contingencies included in the agreement before signing, to avoid any unpleasant surprises during the sale process.