Common Purchase Contract Contingencies

Common Purchase Contract Contingencies

Back in the old days, when Barry Manilow was cool -- OK, he was never cool, I just made that up -- but a long time ago, agents used to call contingencies weasel clauses. That's because a contingency would let buyers weasel out of a contract. That is, to cancel a contract without penalty, meaning buyers would get back an earnest money deposit upon cancellation.
The types of contingencies vary from state to state. Your state might make a big deal out of a septic inspection, for example, because it could cost many thousands of dollars to replace a faulty septic system. But many contingencies are common to every state. For clarity, and because many states follow California law, here is what is expected in California:

· Appraisal.
Buyers who obtain a loan will be required by the lender to pay for an appraisal to substantiate the purchase price. Sometimes, a low appraisal is received.

· Loan Contingency.
Even though a buyer may hold a loan pre-approval letter, further investigations concerning the property or the borrower could result in a loan denial.

· Home Inspection.
Buyers have the right to hire a home inspector and conduct a complete inspection of the home. If buyers issue a Request for Repair, the seller must receive a copy of the home inspection.

· Lead-based Paint.
Federal laws gives all buyers 10 days to inspect for lead-based paint. Many homes built before 1978 contain lead-based paint.

· Wood Destroying Pest Inspection.
The contract should specify who will pay for the pest inspection and whether outbuildings or garages are covered in the inspection.

· Roof Inspection.
Many home inspectors will not walk on a roof due to possibility of damage and / or liability if the roof is damaged. Some buyers hire a roofing company to conduct a roof inspection.
· Sewer Inspection.
Sewers can get clogged from tree roots or deteriorate over time. Plumbing companies can insert a camera into the sewer line to check for damage during a sewer inspection.
· Radon, Mold or Asbestos Inspections.
Depending on a visual inspection, sometimes home inspectors will call for additional inspections by licensed entities to check for special situations such as radon gas, mold or asbestos.

· Early Occupancy Agreements.
Contracts can be contingent upon the buyer and seller entering into a written agreement that allows the buyer to rent the property prior to close of escrow. This is known as early buyer possession.

· Private Well Inspections.
If the home is not connected to city water -- on a private well, buyers may want assurance that the water is potable and meets acceptable health standards.

· Preliminary Title Report.
Title investigations will disclose easements, CC&Rs, and monetary liens of record, including the ability of the seller to transfer clean title the buyer. If you can, always order a title policy.
· Homeowner Association Documents.
Buyers should obtain for approval a copy of all homeowner association documents, including meeting minutes, if applicable.

· Seller Statutory Disclosures.
Sellers are required in CA to disclose all known material facts, including preparing and delivering a Transfer Disclosure Statement (TDS), Natural Hazard Disclosure Statement, special taxes and statutory supplemental and / or questionnaire.

· Contingent on Selling Existing Home
Buyers who have an existing home might want to buy before selling and make the contract contingent on selling their home. Sellers who accept contingent offers like this often give the buyer a certain number of days to perform. If the buyer cannot perform, the seller retains the option to cancel the contract.


Cool Elena Cool
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."

another hats off elena

This is good info and it will help those that are viewing the actual purchase agreement understand it a whole lot more.

We must really get a life and get off once in a


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Thanks hon. I know it's like an addiction! But a good one... Ha!


Cool Elena Cool
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."


This is really helpful and will go into my notes.
Being so new to US laws and regulations I appreciate all these you guys post. I am a long way from totally understanding some of them! But I know that every day more pieces of this jig-saw puzzle fall into place.

Thanks again!



The contingency I use for just about anything

This is good information thank you.

I use: "This offer is contingent upon buyer and/or buyer's partner's suitable inspection and acceptance of the property within ________ days after the acceptance of the property."

I use this for just about anything. For example if I gave myself 15 days for the contingency and needed financing but could not find the financing I would state that myself or my partner (which is not defined in the contingency) does not accept the property and I would then get out of the contract and get my earnest back.


If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125


I've used that one myself, thanks for adding that coach!


Cool Elena Cool
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."


Yeah I have used that one too. "upon partners approval"

My realtor did not like it when I used it...she said "what are you getting out of....a contract that you accepted!" said "This offer is contingent upon buyer and/or buyer's partner's suitable inspection and acceptance of the property within ________ days after the acceptance of the property." do you mean contract here instead of property?



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