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  • Tom Lichtenberg TomSells

What are contingencies in a real estate purchase agreement?

Contingencies of an offer.

When a buyer makes an offer to purchase a property that offer is said to be made "contingent upon" a list of items or contingencies within the RPA (real estate purchase agreement).

These are the most common and most frequent contingencies:

A buyer's offer is contingent upon the property appraising for no less than the agreed upon purchase price.

A buyer's offer is contingent upon the buyer/borrower qualifying and getting the loan they were initially quoted.

A buyer's offer is contingent upon investigation and inspection of the property.

A buyer's offer is contingent upon review and approval of the sellers written disclosures about the property.

A buyer's offer is contingent upon insurability of the property and satisfaction with the monthly or annual premium for such insurance

There are of course many other possible contingencies such as a buyer who may be contingent upon the sale of their existing home, or maybe the seller retained a contingency of the sale to find a replacement property.

When a seller accepts a buyers offer and a contract for purchase is created the buyer makes an initial deposit to escrow, commonly referred to as the buyers EMD (earnest money deposit). During contingency periods a buyers deposit is 100% protected from loss to the seller. When buyer has signed a contingency release form and has removed all contingencies in writing that is when the buyer has effectively placed their deposit at risk of loss to the seller should the buyer change their mind or simply not complete the escrow and close on the property for any reason.

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