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Updated:         June 3, 2018

Real estate contracts, in general, have grown increasingly more detailed and complicated over the past several years. The Real Estate Purchase Contract, in an effort to "cover all aspects of the home purchase", has grown in length and complexity over the years.

Various common "contingencies" are contained in the purchase contract language. It would be a rare real estate contract that did not contain and/or require at least one or more "contingency" clauses.

Some of the more frequent clauses include the purchase being contingent upon (or conditioned upon) the sale of a current home, the borrower being approved for a new loan, or the borrower's final "walk through" inspection of the newly purchased home.

Other contingencies might involve roof inspections, pest control approvals or particular repairs being done to the property prior to close of escrow.

All contingencies need to be specific and should be written to include these five steps:
1. clearly identify the contingency.
2. determine who will eliminate the contingency.
3. determine how the contingency will be relieved (usually in writing).
4. determine the time period in which the contingency is to be removed or eliminated.
5. identify who will pay for any costs that might occur.

Using the above as a guide, rather than writing a contingency as "a roof inspection to be performed", one could improve on the language as follows:

"A roof inspection is to be conducted by a certified roofer within ten days of acceptance of the offer. The report shall be approved, in writing, by the buyer, within three days of receipt of same. The report, and any repairs required by said report, to be completed and paid for by the seller prior to close of escrow."

The latter clause, while longer, is more precise and will more likely avoid future misunderstanding between buyer and seller.

While the purchase contract identifies some of the more common contingency items, the above "guide" might be applied to make certain that all parties know what to expect regarding any particular contingency. This might be especially important when either the buyer or seller "feels particularly strongly" about a specific issue.

Web Page/Contingencies