More than likely if you have ever bought or sold a house or land you have come across the term "contingency". The definition is an event that may, but is not certain to occur. In Real Estate, a contingency basically says "if this does not happen" then my offer is withdrawn or no good....an example seen a lot is an offer contingent upon closing on my current home first.
In North Carolina's Standard Offer To Purchase and Contract, there are a number of contingencies that must be met in order for a home to close, some more nail-biting than others, but nonetheless they are there in full force to protect both buyers and sellers depending on the situation. First, you will usually have a financing contingency. This says that in order for one to close on a certain property, they must be able to obtain financing at a certain rate by a certain time OR the contract is voidable. Next is a repair contingency. This says that after an inspection the contract is contingent on the seller fixing certain repairs requested by the buyers as long as they are valid repairs mentioned in the inspection clause. You also have an appraisal contingency stating that the property must appraise at a certain price.....usually only used when paying cash because if you were financing the financing contingency would take care of this issue.
The two main contingencies that you hear of the most are the ones depending on whether a currently owned property closes by the time your new property is to close. The first is an Existing Contract Contingency (#3) which basically says...I am going to buy your house IF my current home which is ALREADY under contract closes by a certain date....if it doesn't...I'm out. The more fearful and unattractive contingency depending on the market you are in is the Contingent Sale. This means...hey, we want to buy your house, but we have not had an accepted/acceptable/ANY offer on our house yet, but we want you to accept our offer assuming our current house will sell. Very confusing huh....well that's Real Estate. It is also possible for buyers to write their own contingencies into a contract....for example, Joe Buyer says...hey, I am going to buy your house IF the Yankees win the World Series!! Funny, but true. A contingency can be written into a contract no matter how far fetched...but a more likely scenario would be someone wanting to buy a house, but making it contingent on a fence being approved by the HOA. I hope this helps cut down on the confusion a bit....for more information visit us here.
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