Top Real Estate Contingency Clauses 

 Posted on January 22, 2025 in Real Estate

Real estate contracts are intended to protect the rights of buyers and sellers with respect to the purchase and sale of real property. One of the ways they do this is through contingency clauses. These clauses are meant to protect the parties if something goes wrong between the time the buyer makes an offer on the home and the closing. They give the parties leeway to back out of a deal in the event financing or inspection issues arise, for example. An experienced Illinois real estate attorney can advise you on the contingency clauses in your real estate purchase and sale agreement. 

What Are Real Estate Contingency Clauses?

Contingency clauses outline the conditions that must be met before a contract is enforceable. If the condition is not fulfilled within the time set forth in the contract the parties may back out of the agreement without legal or financial consequences.

What Are Common Contingency Clauses?

Financing Contingency

Also called the mortgage contingency, this clause states that the buyer’s offer is contingent on the buyer obtaining financing from a lender. It is meant to protect the buyer in the event that they are unable to get financing so that they have a way to back out of the contract if they cannot pay for the purchase.

Home Inspection Contingency

Illinois law requires buyers to disclose certain issues with their property. In addition, buyers will hire a home inspector to inspect the property. The home inspection contingency helps protect buyers if the home inspection reveals certain major issues related to pests, electrical and wiring, heating and air-conditioning, mold, and other important facets of the property. If the home inspector finds issues and the seller will not repair them or renegotiate the price, the buyer can back off from the deal without penalties. 

Appraisal Contingency

If a buyer is using a mortgage to purchase the home, such a contingency is key because most lenders will not issue mortgages without knowing the appraised value of the home. This clause will stipulate that if the appraised value of the home is below a certain amount, the buyer may back out of the deal. 

Title Contingency 

A title contingency clause will provide that if a defect is found in the title following a title search, the buyer can back out of the purchase without a penalty if the title issue cannot be resolved. 

Contact a Cook County, IL Real Estate Attorney 

Buying real estate is an exciting process, but also a stressful one. Given the many legal and financial issues that can arise when selling or purchasing property, it is recommended to consult with an experienced Arlington Heights, IL real estate attorney. At Dickler, Kahn, Slowikowski & Zavell, Ltd., we put our 150 years of combined experience representing our clients to offer advice on contingency fees and other aspects of the real estate purchase and sale agreement. Contact our offices at 847-593-5595 for a consultation.