Contingencies ensure that your real estate contract is valid and legally binding. Both sides of an agreement are forced to take the agreement seriously and perform a series of steps before making a major purchase. In Rhode Island, there are several contingencies that are frequently included in real estate contracts.
The meaning of a contingency
A contingency is a legal requirement that is necessary to make a purchase contract valid. If a specific condition is not met, either side can back out of the agreement. In the end, both sides must sign to make it legally binding.
Types of contingencies
The title contingency allows the potential buyer to research the title and bring up any issues before moving onto the next step. This step is necessary for the buyer and seller to transfer the real estate to its new owner.
A mortgage contingency requires the buyer to obtain financing within a specified period of time before buying a home. If this condition is not met, the seller can withdraw from the contract and work with another buyer.
A home inspection is one of the most important steps to perform before a purchase. This contingency involves having the house inspected by a qualified professional. The inspection ensures that the property is suitable for living, and if defects are found, the buyer can back out of the deal. The seller is encouraged to make the repairs but is not obligated to.
Contingencies are needed in every contract
A contingency forces a prospective home buyer and seller to consider the seriousness of making a purchase. Every term in a real estate contract is designed to protect the best interests of both the buyer and seller.