What to Know About Common Home Buying Contingency Contracts

When it is time to buy a property, are contingency clauses necessary? Some contingencies may create additional expenses for buyers but may be useful tools for closing on a home and potentially having a seller make needed repairs. First-time home buyers can help themselves by learning about common home buying contingencies and why it is important to work within specified timelines.


What Is a Contingency Clause?

A contingency clause is an action or condition that needs to be met for the contract itself to become binding. When the contract is signed, both the seller and buyer agrees to the terms outlined in the contract. Contingencies may include specific terms or a stated timeframe. Home contingencies in home purchase contracts can be helpful for buyers and sellers. However, be aware that in a seller’s market where there may be high demand for available properties, some may choose to forgo certain contingencies as part of the contract. A local agent may be able to advise further on the need for any such action.

Common Home Contingencies

There are a number of home contingencies that have become common to a purchase contract. Some states may require that a home inspection take place and that a sale is contingent on the results of the inspection. Other common home contingencies include:

• An appraisal contingency that provides a value on the property and serves to protect the buyer;
• A financing contingency or mortgage contingency to allow the buyer time to apply for and get home financing and protects the buyer;
• A house sale contingency to give time to a buyer to sell their existing home so that they may purchase another property; and
• A kick-out clause added by a seller to allow them to market the property to other qualified buyers.

While the majority of contingencies offer additional measures of protection for the buyer, others like the kick-out clause, act in the best interests of the seller. Contingencies keep the process moving along and create time lines for individuals to have specific actions performed so that the home can be moved to the next step of the process or be allowed to go back on the market without anyone having to break the contract and suffer legal consequences.


Inspection contingencies, appraisal contingencies and financing contingencies occur earlier in the process. The buyer needs to be approved for financing and a home mortgage loan before other considerations may take effect. Professional home inspections are useful for buyers and may help them to negotiate for such things as concessions or repairs. If a seller declines to perform either of these actions when required, then a buyer is allowed to have their earnest money returned and be released from the contract.

When Are Home Contingencies Used?

Home contingencies are used because they are required by state law or to move the process along while allowing openings for either the seller or buyer to legally back out of a binding contract without repercussions. Specific timelines often prod buyers who want to close on a home to take action and help sellers finalize all aspects of a sale. Assessing the value of a home and getting financing on a home are often required earlier in the process of buying a home.

Time is important and buyers may potentially lose out on a home if they do not act within a certain time frame. Sellers may not be able to make a sale if they have to make repairs on a home or offer a concession to a seller after a home inspection is performed on the home. An agent may be able to prepare or modify a contract in certain states. Review any contingencies and timelines in a home buying contract prior to signing the contract.

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Venice, Florida 


United States