Contingencies of a Real Estate Contract

When it comes to buying or selling real estate, there is a lot of information to be processed within the contracts. Unfortunately, many of us do not seek legal guidance when it comes to signing these agreements, sometimes leading to complications later on. The real estate attorneys of Mazzoni Karam Petorak & Valvano want to make sure you understand the contingencies of a real estate contract before you sign on the dotted line.

What is a Contingency? – Real Estate Contract

When we talk about contingencies in real estate contracts, we are speaking to the criteria which must be met for the sale to be complete.

In most real estate contracts, there are five contingencies that must be met before the sale can go through.

  • Home inspection
  • Appraisal
  • Mortgage
  • Sale and settlement 
  • Settlement

In general, contingencies are added to real estate contracts to protect the buyer if they decide to back away from the sale should one of the above contingencies not come to fruition. 

Home Inspection

Considered the most important contingency of a real estate contract, the home inspection contingency allows the potential buyer to have the home inspected by a certified inspector, who can then discuss any issues in the home.

This allows the buyer to request the issues be fixed or they can simply back out of the sale and receive the deposit back. While you can waive contingencies to expedite the process, it is almost never a good idea to waive the home inspection.


As the buyer of a home, you likely have a lender that you are working with for the mortgage. In the appraisal contingency of a real estate contract, the lender will hire a third-party appraiser to assess the fair market value of the home.

This is important for the buyer because if the value of the home is less than what the seller is asking for, you have a right to back out of the deal.

Some buyers may feel like waiving the appraisal contingency is a way to make their offer more favorable, however, this can be risky because your lender will only give you so much upfront, and if your home comes in at a value that means you’ll need more of a deposit, this can be quite the financial burden.


Similar to the appraisal contingency, the mortgage contingency is mostly to protect the buyer. In a standard real estate contract, the buyer will have a set amount of time to get a lender to provide the cost for the mortgage. 

However, if for some reason the buyer is unable to secure a lender, they can back out of the deal and walk away with their deposit.

Sale and Settlement

For many second-time home buyers, they may be waiting to sell their current home before reaching a settlement. Under the sale and settlement contingency, the buyer must give the seller a certain number of days that they have to sell their current home before they enter the settlement of the new one. 

This works in two ways. The first is so the seller has the option to continue accepting offers for the home. If an offer is received that is better than the initial offer, the seller can request that the buyer remove the contingency and continue with the sale. If that cannot be done, the seller can void the contract and return any deposit that was given.

This also works to benefit the buyer. If they cannot sell their original home in the set period of time, they can pull out of the deal without losing their deposit. 

However, if the buyer of the new home is in the process of selling and the home does go under contract, the settlement contingency is then in effect.

Settlement – Real Estate Contract

Once the buyer of the home is under a contract for their original property, that buyer has so many days to acquire those funds to then use for the purchase of their new home. If this does not occur, the buyer can pull out of the deal without losing deposit funds.

Review the Contingencies of Your Real Estate Contract With MKPV Law.

If you are in the process of buying or selling a home, it is wise to have a trusted real estate attorney on your side who can guide you through the process. Many times, individuals may decide to enter a contract without fully understanding the value in the contingencies, and thus waiving their rights to better the deal, even though it puts them at risk.

If you have concerns about your real estate contract, contact Mazzoni Karam Petorak & Valvano. We serve clients in Lackawanna, Luzerne, Wayne, Monroe, and surrounding counties.

Put your trust in a law firm that puts your best interests first. We offer a free case evaluation to all potential clients.

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