When a buyer and seller of a home come together over a purchase agreement, they may at times find that contingencies need to be made. In this context, contingencies are certain conditions that have to be met before a buyer will be able to close on the home. Should these conditions fail to be met, the contract can be canceled without causing penalty—either to the buyer or seller of the property—other than lost time and the potential of missing other offers that might have been made if the home had not gone under the purchase agreement. And while contingencies come in many different forms, there are some contingencies we tend to see more often than others.
These include:
- The Sale of the Buyer’s Previous Home: Quite often the potential buyers in a transaction are in the process of selling a home of their own. Indeed, the vast majority of home-buyers looking to change homes fully intend to utilize the money they earn from the sale of their old home to finance the new property—at the very least they intend to use it for a down payment. A contingency on the sale of the previous home makes it such that a purchase agreement can be entered into before the sale of that home, and is nearly always subject to a time limitation. Which is to say, if the buyer’s previous home has not gone under agreement by a particular date, the agreement made with the seller of the home they want to buy will be canceled, so the seller may then proceed to entertain offers from other potential purchasers.
- A Home Inspection:With this contingency, a professional inspection will be conducted before closing. If the inspector discovers a major issue, the potential buyer can back out of the agreement or make a request to the seller for a correction of the issue before the purchase can proceed.
- Financing: Allows the purchase agreement to be canceled if the potential buyer fails to be approved for a mortgage in the amount they expected to pull.
- An Appraisal: The potential buyer may have the property appraised by a professional, so that the price agreed upon in the purchase agreement can be viewed in comparison to the home’s fair market value. If there happens to be a significant discrepancy, the potential buyer may cancel the agreement without their deposit of earnest money being forfeited.
Whichever side of the purchase agreement you’re on, if you are looking to contend with the real estate market in Tucson or anywhere else in the state of Arizona, an experienced attorney with strong scruples like the real estate attorneys at Provident Law can be a huge help. Our attorneys represent buyers, sellers, landlords, tenants, lenders, borrowers, trustees, guarantors, shareholders, partners, and others. We structure, negotiate and document a variety of real estate and financing transactions, such as leases, purchase and sale agreements, loans and development agreements for a variety of commercial and residential projects. Contact us for more details.
Christopher J. Charles is the founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.
Christopher is a licensed Real Estate Instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.