Contingencies

C - Real Estate Sale Contingencies: Other key ones?

Ramifications and dealing with the inspection issues below are detailed in the CLOSE section. Most visual inspections are paid for by the buyer, per the contract.

Home inspection:                    

Some contracts allow the buyers to back out of a sale if they are unhappy with the inspection. Most call for repair or remediation to see if agreement can be reached between the two sides.

Termite/pest inspection:   

Some lenders require termite and pest inspections and could include structures besides the house (garage). The farther north one goes, the less the creatures are a problem. Otherwise, this inspection is commonly done. Some lenders demand treatment, before closing, if any sign of past or present infestation is discovered.

Radon test:   

Radon has become a fairly prominent health concern since the 90’s. A large percentage of buyers want a radon test performed.

Lead paint test:

Homes built before 1978 in the US most likely had lead paint. A comprehensive test can be expensive, such that most buyers forgo it, although inexpensive tests from local hardware centers are available. Health danger comes from old painted window trim that a baby could teethe on or areas where old lead based paint could rub or peel off and be ingested.

Lead intake at an early age is a legitimate concern. Witness the attention it has received in the news concerning toys imported from China that contain lead based paint. It can cause death in children and pets. As such, it has become a concern for many homebuyers.

Test for mold:

Allergies have become a bigger issue with mold the latest evil. If water enters the property without the ability to evaporate, mold becomes a problem.

Contingency upon YOU finding your next home

As a seller you can make the sale contingent upon finding your next home. But of course you'll need to find buyers who will go along with this request.

What buyers would you want to buy a house that is contingent upon the seller having 60 or 90 days to find a house that suits them? If the sellers can't, the buyers will have paid for a mortgage application, inspections, possible attorney fees and no home to move into.

Never market your home with this stipulation. It will eliminate most potential buyers.

Options, like renting back from the buyers, a delayed closing or delayed possession can be negotiated. It’s also advisable to have attorney help with such a contractual condition. 

Contingency considerations:

Both buyers and sellers can have a contingency for just about anything that they agree on.

If a contingency addendum is added, be sure that all parties sign this separate page to acknowledge agreement. If anything is changed on the original contract document, be sure all parties initial next to the modification.

Allow enough time for contingencies to be satisfied, although deadlines for these events should occur as soon as reasonably possible, although both parties can agree to an extension.

If buyers can use contingencies to easily get out of the contract, then the earnest money tends to become meaningless. The exception is when the buyers don't have any contingencies and decide not to buy and the contract specifies that they forfeit their earnest money.

When a contingency is removed during the contract period, it's often through a phone call from one agent notifying the other, advising that a contingency has been met (dropped) such as the inspection contingency or subsequent inspection repairs or that the buyers sold their house, etc. In many areas, the other party wants this release info in writing, with signatures. Some locales have a contingency release form.

Other contingencies  include (but are not limited to) inspections by specialists of furnaces, wells, asbestos, roof and plumbing.

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